The arrests of most of Bell's elected leaders Tuesday brought cheers and dancing in the streets in the small, working-class city, but added to the already deep uncertainty about its future.
With four of Bell's five City Council members facing corruption charges, the Los Angeles County Board of Supervisors voted to push for a court order to seize authority from them and turn day-to-day management over to an appointed receiver.
Run for nearly two decades under the tight control of City Administrator Robert Rizzo, who was among those charged Tuesday, Bell now faces a possible recall election and an effort by state Atty. Gen. Jerry Brown to try to remove most of the city's elected officials from office.
In addition, the long-term financial outlook for the city of 39,000 southeast of downtown Los Angeles is murky: The state controller's office has found that Bell collected about $5.6 million in illegally imposed tax increases and business-license fees -- and now must refund an amount equal to more than one-third of its $13.5-million general fund. As city officials work on plans to refund the money, they also must find a way to balance the budget to adjust for the loss of the illegal tax revenue. That could mean cutting jobs or services, or raising revenue through bonds.
The latter option became less viable Tuesday when a Wall Street rating firm cast new doubt on Bell's ability to pay its existing debts, including a $35-million bond repayment due Nov. 1. Fitch Ratings downgraded its outlook on $57 million of Bell bonds, citing "financial weakness" and fallout from the salary scandal and illegal property tax hikes. In August, Standard & Poor's downgraded Bell's bonds to junk status.
"It is really hard to see what their path out of this is at this point," said Patrick Whitnell, general counsel for the League of California Cities.
Other area cities have dealt in the past with public corruption scandals, but it's rare for so many members of a single council to be charged at one time -- and for alleged crimes that spanned so many years.
The management team that took office in July after Rizzo and other top officials resigned vowed Tuesday to continue operating day-to-day affairs at City Hall even with most of the council facing criminal charges. But how that would work remained unclear.
"Without a quorum, a city council can't conduct any city business, and by default, the city manager runs the city without input from a democratically elected board, even if it's an indicted one," said Assemblyman Hector De La Torre (D-South Gate), whose district includes Bell and who praised prosecutors for bringing the charges. "People need to look at this closely.... It's a no-win situation. There is no right answer to this at the end of the day."
Amid the chaos, some see hope that, with Rizzo and others gone, a better form of government will emerge.
"The lid finally blew off and they're starting to fall," said Enrique Martinez, who watched the announcement of charges on a big-screen TV at Pacific Furniture, the store he has owned near City Hall for 34 years. "One by one, they're going to fall until this city is clean again."
In the meantime, who will govern the city remains uncertain. Unless the four charged council members are convicted of felonies, removed from office by recall, or resign, they will remain the elected leaders of Bell, officials said.
"Until then, we are still functioning with a five-member council," said interim City Atty. Jamie Casso, who along with interim City Administrator Pedro Carrillo has been running the city while also investigating potential wrongdoing during the Rizzo era.
In a prepared statement, city officials said Tuesday that "residents of Bell expect and demand that their city continue providing much-needed public services" despite the current crisis.
"To that end, we are working around the clock to help ensure the reliable day-to-day operation of the city government, pursue all options for recovering taxpayer funds that were spent improperly, and implement best practices that will enable the city to emerge from this very difficult time with a more efficient, transparent and trusted government," the statement reads.
Should the four council members step down or be removed, Casso said, the city probably would be put under the authority of Carrillo and Councilman Lorenzo Velez, who was not charged, and would then hold a special election to fill the vacant seats. Velez was the only one who did not receive the nearly $100,000 annual salary that Bell's council members paid themselves.
The county Board of Supervisors' proposal for a receiver, which endorsed an element of the lawsuit that Brown brought against Bell and its officials last week, would provide a different governmental structure. Under that plan, the receiver would have power to hire people and enter into contracts on the city's behalf, acting in effect as the municipal equivalent of a court-appointed chief executive to run a bankrupt company.
