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Bell leaders leave, tax burden stays

City must pay back $50 million in bonds for a nonexistent park. Part of the funds went into Rizzo's pocket.

August 30, 2011|Ruben Vives

Bell's residents already pay one of the highest property tax rates in Los Angeles County despite being one of its poorest cities. Now, homeowners are discovering that their taxes are about to go up again to pay for a park that will never be built.

It's one more legacy of the Robert Rizzo era, even though residents thought they had turned a page when the former city administrator was taken away in handcuffs, the last of those accused in a sweeping public corruption scandal were voted out of City Hall, and a new City Council was sworn in.

The tax increase is needed to pay back $50 million in bonds issued by the city; it came as a surprise to homeowners who hadn't noticed when the former City Council quietly approved a resolution to increase the property tax rate for three consecutive years.

For a home valued at $400,000, the annual property tax levy would increase by $116 beginning around October, according to city officials. Bell's current tax rate would rise from 1.54% to 1.57%. That means the owner of a $400,000 home in Bell would pay about $2,000 more in property taxes than a similar homeowner in Pasadena or Beverly Hills

The bond was supposed to be used to build a state-of-the-art sports park, library and athletic facility in the small town southeast of downtown L.A. But much of the money was squandered, with some being siphoned off to boost the salaries of Rizzo and others. Officials said that they lack the money to build the park but that there is nothing they can legally do to stop the tax hike.

The cost of the park went unnoticed for the first five years after the bond was approved because the city didn't impose the levies until August 2009, when the first of the tax increases took effect. Once the property tax reaches its highest level, it could remain in effect until the bonds are paid off.

All tax revenue will go to pay back the bond-holders -- so Bell won't be able to use any of the proceeds to deal with its budget problems.

This has residents angry.

"You have failed to right Rizzo's wrong," resident Nora Saenz told the City Council last week during a contentious meeting about the tax hike.

Taxation is a sensitive issue in Bell. After the pay scandal broke, residents learned that the city had illegally charged them more than $5.6 million in taxes to help pay huge salaries for city officials. Residents of the working-class city are paying the second-highest tax rate in L.A. County, far higher than in affluent areas.

City officials said they knew the tax increase would generate anger and felt they needed to tell residents about it as soon as they discovered it was coming.

"Residents are reacting to the unfortunate legacy left by irresponsible municipal managers, past council and the greedy," said Councilman Nestor Valencia. "The needy should not be left holding the bag because of the greedy."

Valencia and other City Council members were elected in March to replace those charged with public corruption last year. But now, the new council is coming under criticism for its inability to repeal the tax increase.

"They promised drastic changes and cuts," said Poly Rico, 48. "They haven't done it."

Rico and others said many residents will struggle to make the extra property tax payment.

The town's unemployment rate in July was 17.4%, significantly higher than the statewide rate of 12.4% and Los Angeles County's 13.3%, according to California's Employment Development Department.

In 2003, the city promised to build a state-of-the-art complex for baseball and soccer and a new practice space for the Bell Sapphires, its award-winning cheerleading team. The city also planned to improve the civic center and parks, and to build a new library and other facilities.

The city spent millions of dollars on design, site preparation and fencing. But the land remains vacant, with no plans to build anything there. Some improvements were made at other city parks, but the promised facilities weren't built.

Of the $50 million issued through two separate bonds, about $20 million remains.

The Internal Revenue Service, Securities and Exchange Commission, and state Department of Corporations are investigating the city's handling of the bonds.

The city has asked finance and bond experts to continue to study the city's bond obligations and present a plan to pay them off without incurring more levies, city officials said. One possibility is returning the remaining $20 million, which would lower the debt and potentially prevent more tax increases.

"I own property ... and I know what's coming out of my pocket is coming out of theirs too," said Mayor Ali Saleh.

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ruben.vives@latimes.com

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