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In City of Industry, business and governance converge

The mayor says he keeps his civic and business dealings separate. But as a prominent business figure, his companies are tied to city contracts and might benefit from an NFL stadium.

October 20, 2009|Rich Connell

Everyone who does business in the city of Industry is required to sign up with Mayor David Perez's company.

For years, a firm partly owned by the mayor has held an exclusive, multimillion-dollar franchise to pick up trash from the warehouses, manufacturing plants and other commercial enterprises packed into this oddly configured, avidly pro-business San Gabriel Valley city.

And that is just one Perez investment thread that runs through town -- a place with fewer than 100 voters, tight-knit City Hall relationships and now a good chance of becoming home to an $800-million stadium complex and Los Angeles' next professional football team.

On top of the commercial refuse franchise, which generated more than $12 million for Perez's disposal operation over the last year, another Perez firm collected nearly $6.8 million from the city for maintaining street medians and parkways, removing graffiti and other services, a Times review has found.

The mayor's business-partner brother serves on the city planning commission. A nephew, who works for the family's management company, is on the board of Industry's redevelopment agency, which provided income last year to yet another family business in which the mayor and his brother are investors.

Industry has always been an anomaly among Southern California cities -- a narrow, jagged corridor along freight train lines stretching from Pico Rivera to Pomona with hundreds of millions of dollars' worth of businesses, a tiny population and a political structure that more closely resembles an alliance of deeply rooted families than a traditional municipality.

For years, the city has done business largely out of the limelight. But now, as Industry's leaders have pressed their support for a 592-acre football stadium and retail, dining and office complex, new attention has been drawn to a local governing culture that critics view as disturbingly insular.

Nearly a third of the town's registered voters appear to be related to the mayor or residing in homes owned by a family land investment partnership, The Times' review found.

That land investment partnership also has financial ties with at least two other City Council members: one a tenant and the other a landowner that the company paid more than $100,000 last year, records and interviews show.

In a recent interview, the mayor and a deputy city attorney said all of Perez's investments have been properly disclosed and his interests in contracts have been carefully managed to avoid self-dealing and conflict of interest violations.

"We work hard at it," Perez said, noting that the rubbish and maintenance agreements were in place well before he took office in 2001. At that time, he said he removed himself from day-to-day business operations and dealings with the city. The mayor also said he sees no issues of potential political influence in his financial ties to other Industry decision-makers.

Concentrated power

Cal Poly San Luis Obispo professor Victor Valle, author of a new book on Industry's formation, sees the city as a vivid example of jurisdictions designed to "concentrate the power to make major economic decisions in a tiny group of like-minded people."

It's a model that can not only distort voter power but contribute to an "incremental erosion of our democratic institutions," argues Valle, a former Times reporter who covered a 1980s construction kickback scandal that landed an Industry founder in prison.

Critics of the city's approval of the 75,000-seat football arena complain about Industry's municipal election earlier this year. By a 60-1 vote, residents endorsed $500 million in city borrowing, part of it earmarked for public improvements to support the would-be National Football League stadium.

"This is ridiculous, such a small number" deciding an issue affecting "the whole, entire San Gabriel Valley," said Howard Wang, part of a group of residents in neighboring Walnut who sued in hopes of forcing a new environmental impact study of the stadium.

Industry leaders and elected officials from several nearby cities note that the stadium would create thousands of jobs. And the city should get credit, supporters say, for the good that comes from its business development.

The city's corporate community helps raise hundreds of thousands of dollars for community and school programs serving nearby cities, said longtime civic activist Donald Sachs, executive director of the Industry Manufacturer's Council.

"It's a matter of giving back. We are supporting all of those communities," he said.

Mayor Perez, a key stadium backer, says his city is "the economic engine of the San Gabriel Valley. . . . So if we affect our neighbor, we give them jobs.

"And that's why this city was formulated . . . a unique city, to provide jobs and not have a large residential base that [would] complain about factories running" around the clock, he said.

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