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Judge Rejects Land Deal in South Gate

The preliminary ruling orders that the city get money and 11-acre site back. It had sued to undo a pact that recalled council members set up.

August 27, 2004|Richard Marosi | Times Staff Writer

A judge in a preliminary ruling has voided a controversial land deal that South Gate's recalled City Council members awarded last year to a politically connected businessman -- marking a potential victory as the city tries to undo 11th-hour actions that left the municipality nearly bankrupt.

In the days before voters overwhelmingly ousted the three-member council majority from office, it voted to sell a city-owned 11-acre site to GWS Nursery and Supplies Inc. for $1.9 million. The company is owned by George Garrido, a former business partner of then-city Treasurer Albert Robles, who was also recalled.

The action was approved over fierce protests of residents and other council members, who called it a gift of public funds, because the city gave Garrido loans and grants for most of the money he needed to purchase and develop the site.

After Mayor Xochilt Ruvalcaba, Vice Mayor Raul Moriel, Councilwoman Maria Benavides and Robles were recalled, the city's new leaders filed a lawsuit seeking to void the contract

The judge's proposed ruling -- which is subject to objections by attorneys -- calls for Garrido to return $2.5 million to the city and to give up ownership of the property.

City Attorney Raul Salinas said, "We're glad the judge saw the actions for what they were -- an 11th-hour giveaway of taxpayer dollars and property to a former business partner of Albert Robles."

The ruling by Los Angeles County Superior Court Judge Elihu M. Berle, which was released on Tuesday, was formally announced Thursday.

The land deal was viewed as one of the most controversial in a series of last-minute moves by the former city leaders to award lucrative contracts to cronies and attorneys representing them in criminal defense probes.

The transaction has drawn scrutiny from the FBI, which subpoenaed records and documents as part of an ongoing investigation into suspected political corruption.

The land straddles the Long Beach Freeway and is familiar to motorists as the site of a Jumbotron billboard. It was mostly vacant until Garrido converted it into storage for nursery supplies.

City leaders approved Garrido's bid in January 2003, one week before the recall election. Under terms of the agreement, Garrido put up $400,000 of his own money. The city awarded him $2.5 million in federal low-interest loans and grants for equipment and construction of a recycling plant.

But that agreement, the judge ruled, was different from the final version signed by city officials one week later. The final sign-off occurred after the recall, but before the new leaders had taken office.

The judge ruled that the inconsistencies, which involved differing loan and interest rate terms, were material in nature and that the agreement did not meet all the requirements of a contract.

Garrido's attorney, Julie A. Herzog, said she will file an objection. She said that any differences between the agreements were not significant, and that a valid contract does exist. City officials were confident that the judge's ruling would stand.

City Manager Gary Milliman said South Gate is still recovering after the former leaders allegedly drained the city's reserves, forcing about 200 layoffs and some cuts in services. The city is trying to recoup millions of dollars that the former council paid to attorneys for criminal defense costs, Milliman said pursuing such cases in the courts has been worthwhile.

"This is a validation of the current City Council's efforts to reverse these bad business deals of the past," he said.

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