COMPTON — ing to stave off a looming budget crisis, the City Council voted Tuesday to negotiate with a Los Angeles investment banker who contends that some "new and innovative" financial footwork could kick up to $20 million into slumping city coffers.
James K. Chilton, chairman of the Century City firm of Chilton & O'Conner Inc., told the council that his plan was "too complex to go into details at this time."
But in an interview, Chilton said the city would basically float a multimillion-dollar redevelopment bond, then direct some of the proceeds into general operating accounts by taking advantage of various exceptions in laws that otherwise prohibit such use.
Chilton's firm, in the meantime, would collect a fee for marketing the bond issue.
And some of that fee could find its way into the pockets of former City Manager Laverta S. Montgomery. Chilton confirmed that Montgomery is acting as an occasional consultant to his firm. (Montgomery was fired last fall by the council, which said she had been chronically absent from work. But in a federal sex discrimination suit against the city, Montgomery contends that the dismissal came because she spurned a marriage proposal from Councilman Robert L. Adams.)
When City Councilman Maxcy D. Filer asked if it is legal to use redevelopment money to bail the city out of its budgetary bind, Chilton acknowledged that county officials are "looking over every redevelopment agency's shoulder, trying to make sure that they're not channeling (redevelopment) increment directly into the general funds."
However, Chilton said he and his associates "believe very strongly that we have developed justification for moving some of that money, perhaps all, to the general fund."
For example, he said redevelopment funds might be used to pick up certain police, fire department or governmental management expenses now paid out of the general fund. Or bond proceeds could be used to repay millions of dollars in loans that the council has given its separate Community Redevelopment Agency over the years.
Mayor Walter R. Tucker said council members should "do whatever we can do" to consider every alternative that might bolster the city's fiscal bottom line.
Last month, city financial experts warned that employee layoffs could become necessary if the council doesn't soon cut the budget or find a way to replace the $2.5 million that federal revenue sharing used to annually bring Compton until Congress discontinued the program last year. Council members recently rejected raising the city's utility-users tax, and they continue to disagree on how best to cut the budget.
Chilton said his proposal is only possible because rising property values in the city's Walnut Industrial Park redevelopment district now generate more taxes than the city needs to cover its previous bond debts.
The redevelopment taxes now generate $9.7 million annually, Chilton said. The debt service still needed to pay interest on past bonds, meanwhile, is only $6.2 million. So, the roughly $3.5 million left over could cover a new bond issue of as much as $30 million, he said.