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Garcetti cuts ties to oil drilling operation at Beverly Hills High

The L.A. mayoral candidate assigns his interest in the lease — a focus of attack by rival candidate Wendy Greuel — to a friend who is a Newport Beach attorney.

March 06, 2013|By Paul Pringle, Los Angeles Times
  • A 1998 agreement with Venoco promised L.A. mayoral candidate Eric Garcetti and several relatives a share of earnings from any oil or gas that the company extracts by slant drilling under the Wilshire Boulevard property from the high school about a half-mile away. Above, Garcetti talks to supporters.
A 1998 agreement with Venoco promised L.A. mayoral candidate Eric Garcetti… (Wally Skalij / Los Angeles…)

Los Angeles mayoral candidate Eric Garcetti, who has the Sierra Club's backing in his race against City Controller Wendy Greuel, has cut his ties to an oil drilling operation at Beverly Hills High School.

The Times reported last week that the city councilman had signed a lease in 1998 that granted Venoco Inc. drilling rights to a retail property he co-owns through a personal trust.

In a document dated Tuesday, when Garcetti finished first in the mayoral primary, he assigned his interest in the lease to family friend John Stillman, a Newport Beach attorney. No money changed hands, Stillman said.

The 20-year Venoco agreement promised Garcetti and several relatives a share of earnings from any oil or gas that the company extracts by slant drilling under the Wilshire Boulevard property from the high school about a half-mile away.

The high school wells have been the target of some alumni, residents and environmentalists who claim the drilling has produced dangerous emissions of benzene. Venoco insists the wells are safe.

Garcetti's campaign said last week that he had no memory of signing the lease and noted that Venoco had yet to take any oil or gas from the property, the site of a hair salon that pays him and the relatives rent. He also said that he would donate any future drilling royalties from Venoco to the Sierra Club.

Greuel, however, has attacked Garcetti over the lease. In a statement Wednesday, Greuel campaign strategist Rose Kapolczynski said Garcetti's "stealth transfer of this lease to a longtime contributor does nothing to stop the expansion of oil drilling under Beverly Hills High School. If he wants to protect vulnerable school children, he should revoke the lease."

Stillman has contributed a total of $600 to Garcetti's campaigns since 2001, according to the city Ethics Commission's web site.

Garcetti's spokesman, Jeff Millman, said the lease "was never a serious issue, but it was reported in the newspaper and it became a distraction from the real issues."

Stillman said he accepted the lease interest from Garcetti in the hope that it "really would stop something that I believe is a non-story."

He said he doubted there "would ever be a penny made" from the lease and hadn't thought about donating any proceeds to a group such as the Sierra Club.

Meanwhile, The Times has reported that Garcetti has only sporadically reported his ownership interest in the Beverly Hills property on his state and city financial disclosure forms. In general, state law requires disclosure of real estate holdings within two miles of a city office-holder's jurisdiction. The Beverly Hills property is within that distance of L.A.

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 has 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 has 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. The grandfather once ran a clothing store at the property.

Millman said Wednesday that the campaign was reviewing the matter to make sure it has followed the rules.

paul.pringle@latimes.com

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