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Garcetti holds potential interest in Beverly Hills oil drilling

L.A.'S RACE FOR MAYOR

The candidate has been endorsed by the Sierra Club for his 'green' agenda but hasn't mentioned his family's lease interest in a Venoco project.

February 26, 2013|By Paul Pringle, Los Angeles Times
  • A flowery, decorative exterior masks an oil rig on Olympic Boulevard in Beverly Hills. The well is next to Beverly Hills High School and has been the target of parents, students, alumni and environmentalists who claim that drilling has emitted hazarous levels of benzene, affecting the health of those nearby.
A flowery, decorative exterior masks an oil rig on Olympic Boulevard in… (Luis Sinco / Los Angeles…)

In his bid for Los Angeles mayor, Eric Garcetti has promoted himself as the greenest of candidates.

The city councilman from Silver Lake has pushed for an expansion of L.A.'s rooftop solar-panel program and the creation of thousands of clean-energy jobs, all to reduce the region's dependence on oil. Those positions helped Garcetti win the Sierra Club's endorsement.

Missing from Garcetti's environmental platform, however, is any hint that he has long stood to profit from a lease interest in a headline-making oil drilling operation: the wells run by Venoco Inc. at Beverly Hills High School.

FULL COVERAGE: L.A.'s race for mayor

According to documents on file with the Los Angeles County registrar-recorder's office, Garcetti and several family members signed a 20-year lease with Venoco in 1998. It gave the company the subsurface drilling rights to a nearby Beverly Hills retail property that the councilman co-owns through a personal trust.

The lease enables Denver-based Venoco to tap oil and gas underneath the Wilshire Boulevard property by slant drilling from the high school about half a mile away.

The high school wells have been the target of some alumni, residents and environmentalists who allege the drilling has emitted dangerous levels of benzene.

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Venoco insists the wells are safe and says it has taken no oil or gas from the Garcetti property in the 9600 block of Wilshire. Company spokeswoman Lisa Rivas said Venoco secured the lease in anticipation of extending its drilling to that part of Beverly Hills but does not know if the firm will follow through on the plans.

Garcetti spokesman Jeff Millman said the candidate “has no memory” of signing the lease. In response to Times queries, Millman said, Garcetti looked into the agreement and found that he earns just $1.25 from it per year.

“It’s not really an issue,” Millman said.

But Garcetti and several of his relatives who co-own the Wilshire property could collect royalties if Venoco began producing oil or gas from the parcel. Otherwise, they are paid nominal rental fees.

Millman said Garcetti would donate any royalties to the Sierra Club.

FULL COVERAGE: L.A.'s race for mayor

Because the amount of money he has received to date is so small, Garcetti apparently has not been required to list the lease or the fees on his annual financial disclosure forms. It is unclear whether Garcetti has followed state and city disclosure rules for his ownership interest in the property.

When the lease was in its seventh year, Garcetti voted in favor of a 2005 council resolution opposing Venoco's efforts to increase its drilling offshore. At the time, he said in a statement that the ocean drilling "would harm the legacy that we're guarding for the generations that come after us," but he did not mention that he could benefit financially from Venoco's onshore wells.

Millman said the Wilshire property once housed a clothing store run by Garcetti's grandfather. It is now the site of a hair salon that pays rent to Garcetti and the relatives, including his sister and cousins, and his grandfather's trust, Millman said.

In general, state law requires disclosure of real estate holdings that are within two miles of a city office-holder's jurisdiction, said Gary Winuk, enforcement chief for the California Fair Political Practices Commission. The Beverly Hills property is within that distance of Los Angeles. For the most part, the city rules are similar to or stricter than the state's.

Garcetti specifically listed the property on his state and city forms from 2007 through 2009, reporting annual rental income from the hair salon in the broad category of between $10,000 and $100,000.

He omitted the property from the forms he filed in the years before and after that period.

Millman said Garcetti did not report it before 2007 because his advisors believed its location outside the Los Angeles city limits exempted it from disclosure.

Based on new advice, Millman said, Garcetti began reporting his interest in the property in 2007. But starting in 2010, he stopped disclosing it as a real estate holding. Instead, Garcetti listed his rental earnings from the hair salon as income from the Harry Roth Trust, named for his grandfather, believing that was the appropriate way to report the proceeds from the property, Millman said. He added that Garcetti's attorneys would review the filings to make sure they are correct.

The Sierra Club did not respond to requests for comment.

FULL COVERAGE: L.A.'s race for mayor

In 2003, Venoco agreed to pay a fine and install monitoring equipment to settle pollution complaints from air quality officials. The wells were the subject of lawsuits brought that year by the firm of famed environmental advocate Erin Brockovich against Venoco and the city and school district of Beverly Hills, among others. The city and school district earn royalties from the wells.

The suits alleged that the wells had caused cancer in former students. The city and school district subsequently conducted tests that found no evidence of elevated emissions. A judge later dismissed the suits. As part of a settlement, the plaintiffs paid some of the legal fees incurred by the city and school district.

The debate over the wells died down, but the Beverly Hills City Council in 2011 adopted an anti-drilling ordinance that could stop Venoco's operations at the high school when its lease expires at the end of 2016.

paul.pringle@latimes.com

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