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Officials' city loans probed by D.A.

The Inglewood mayor and treasurer borrowed money after a council vote made them eligible. Both deny wrongdoing.

December 25, 2006|Ashley Surdin | Times Staff Writer

The Los Angeles County district attorney is investigating two Inglewood elected officials who borrowed hundreds of thousands of dollars through a low-interest loan program originally intended to help city administrators and executives afford to live in town.

The probe stems from complaints about Inglewood's Residential Incentive Policy program, in which Mayor Roosevelt Dorn and Treasurer Wanda Brown participated.

"We're conducting a criminal investigation at this point," said David Demerjian, head deputy district attorney for the office's Public Integrity Division.

Dorn, 71, a two-term mayor and former Municipal and Superior Court judge, borrowed $500,000 in taxpayer money in November 2004, five months after he voted with a bare majority of the City Council to extend the loan program to elected officials, documents show.

At the time he received the 30-year loan with a variable interest rate of 2.39%, the rate for adjustable mortgages nationally was above 5%, according to the Federal Housing Finance Board.

With nearly half the proceeds from the city's loan, Dorn paid off the mortgage on the Inglewood home he and his wife had bought in 1966, according to the documents. He put the rest -- about $265,000 -- in a bank account, he said.

Dorn repaid the loan in October of this year, records show. By then it had become an issue in his reelection campaign. He narrowly failed to win a majority of the vote on Nov. 7, and now faces Councilwoman Judy Dunlap, a longtime political opponent, in a Jan. 9 runoff.

Brown, the treasurer, who is in her early 60s, took out a city loan for $235,000 in 2005, records show. In an interview, she said she was attracted by the low interest rate (2.868% in her case) which, according to the loan program rules, could never vary by more than 2 percentage points.

Brown, who is paid $64,848 a year and plans to seek reelection in April, said she did nothing wrong and does not intend to return the loan unless the city requires it.

City residential incentive programs are not unusual. In Santa Barbara, for example, city Finance Director Robert Peirson said officials launched an employee mortgage assistance program in 2001 for all city employees -- except elected officials.

"The purpose of the program is to assist with recruitment and retention of staff," Peirson said. "The housing cost in Santa Barbara is one of the main hurdles we have to deal with."

Peirson said he was not aware of any cities that extended loans to elected officials.

Under Inglewood's original program, created in 1992, executive employees could take a loan "for the purpose of purchasing a residence" in the city.

That changed June 29, 2004, when the City Council extended the program to include the mayor, council members, city clerk, treasurer and some unelected administrators. The purpose of the program expanded too, from merely "purchasing a residence" to include "maintaining residency."

Dorn, Councilman Eloy Morales Jr. and former Councilman Curren Price voted for the amendment. Councilman Ralph Franklin did not vote, records show; Dunlap was absent.

The mayor said in an interview recently that he wanted part of the loan to revamp his four-bedroom, two-story home in the city's Morningside Park neighborhood.

"My wife wanted a sun room, and she wanted me to totally redo the upstairs too," Dorn said. "So that was what the loan was for."

Robert Stern, president of the nonpartisan Center for Governmental Studies in Los Angeles and former general counsel to the state's Fair Political Practices Commission, said he had never heard of an incentive program that applied to elected officials.

"It's outrageous. It's giving an elected official a favor, when the official is already required to be in the city," Stern said. "It looks like the official is taking advantage of a program for officials that you need to recruit. You don't need to recruit elected officials.

"Elected officials get the perk of power," he added. "They don't need the perk of a loan."

Dorn, whose annual salary as mayor is about $95,000, said the city's program was no different from housing incentives that private corporations offer to recruit employees.

The council repealed the 2004 modifications in November of this year, after residents complained and officials said they realized it conflicted with the City Charter. It states that no city officer or employee "shall be financially interested, directly or indirectly in any contract, sale or transaction to which the city is a party and which comes before said officer or employee or the department ... with which he is connected, for official action."

Accounts differ on how the 2004 change to the loan program came about.

Mark Weinberg, the former city administrator who prepared the staff report accompanying the modification proposal, said Dorn asked him about extending the program to elected officials.

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