Firm boasts about 'mining' tax dollars to make big profits

Two city pension funds agreed last year to invest up to $50 million in CityView, which talked up its chief operating officer's "strong relationship" with city officials. CityView also included a photo of Mayor Antonio Villaraigosa in its sales packet and boasted of its success at persuading the mayor and a city councilman to change zoning for an 84-unit loft project on the Westside, increasing the property's value by millions of dollars.

Bond Companies may have been the most brazen, telling city pension board members in June that it has "proven ability and resources to capitalize on government subsidies" -- and its own database of public funds.

One urban analyst said the only surprise about the marketing pitch is that Bond was so candid about its ability to work the system.

"It's the ultimate insider's game, and that's what we're really seeing," said Joel Kotkin, author of "The City: A Global History."

"The people of Los Angeles are the backdrop to a bunch of people who use the city as a way of enriching themselves."

A Bond Companies spokesman defended the firm, saying it had worked to invigorate neighborhoods such as Hollywood, Chinatown and the South of Market section of San Francisco -- areas with higher crime, a lack of investment, or both.

Spokesman Raymond Minkus said taxpayer support for the firm's projects was based on requests from neighborhood residents for amenities such as restaurants, supermarkets and affordable housing.

"Subsidies are needed to address specific needs of a community," he wrote in an e-mail.

The pitch is working. Two city pension boards, both with members appointed by Villaraigosa, have voted to invest up to $30 million in Bond Companies.

One high-level pension official commended Bond Companies for trying to improve neighborhoods, but said the city's investment was driven by a desire for strong returns. Bond Companies has projected a 16% return for LACERS, the Los Angeles City Employees' Retirement System.

"Everything they touch, they make money on," said Dan Gallagher, LACERS' chief investment officer.

Bond Companies and its employees have given more than $82,000 in contributions to city politicians and ballot measures. The sales booklet issued to LACERS points out that Bond was the finance co-chairman for Proposition H, a city housing bond measure.

Bond Companies also wooed LACERS by highlighting a few projects where it had obtained taxpayer support.