Officials Call for Inquiry on City Loans

Three Los Angeles City Council members called Wednesday for an inquiry into how two partnerships involving Harbor Commissioner James Acevedo defaulted on $4.1 million in city loans and whether political appointees should be prohibited from receiving city funds.

In a letter to City Controller Laura Chick, council members Jack Weiss and Wendy Greuel asked for an inquiry into Acevedo’s projects, which missed the March 20 deadline for repaying loans on housing projects that were never built.

Weiss and Greuel also asked for a report on the number of city housing loans at risk and whether any of the loans went to city commissioners.

“I don’t know what’s more outrageous -- the fact that a city commissioner has received multimillion-dollar loans from the city, the fact that the commissioner defaulted on the loans, or the fact that several days after the disclosure the mayor has still not done anything,� said Weiss, who has endorsed Antonio Villaraigosa, Mayor James K. Hahn’s opponent, in the May 17 runoff.

Deputy Mayor Renata Simril said the mayor had taken action to ensure that housing projects were built or that the city was repaid. That action, Simril said, included the hiring of Mercedes Marquez as general manager of the Housing Department about a year ago.

Marquez said she set the deadline for repayment by the Acevedo partnerships as part of her effort to bring all housing loans into compliance.

Weiss and Greuel were joined by Councilman Bernard C. Parks in submitting a motion to the council that asks the chief legislative analyst to tally all delinquent loans and make recommendations to tighten loan rules.

The trio of council members also asked in the motion that the city Ethics Commission analyze existing laws “governing the awarding of loans and grants to city commissioners� and recommend “appropriate additional measures.�

Weiss said he might support a ban on commissioners receiving city loans and grants.

“It seems like an inherent conflict of interest to have someone in the government who is also petitioning the government for millions of dollars,� he said.

A spokesman for Acevedo, a Hahn appointee, said skyrocketing construction costs made it impossible to build two apartment buildings after Acevedo used city loans to buy land for the projects in the San Fernando Valley.

Acevedo is trying to sell the land and plans to use the money to repay the city, said his spokesman Mark Ryavec.

The city has imposed zoning restrictions on the land, requiring it to be developed with low-income housing, and Ryavec said that had made it harder to find a buyer.

“Until the city recognizes that the numbers don’t pencil out on the projects and they lift the restriction, they can’t be sold,� he said.

Marquez said Wednesday that the money involved was from a federal program and that initial talks with federal officials indicated there might be a way to lift the restrictions.

Ryavec said Acevedo believed that a review of city housing loans would find other projects having been jeopardized by 20% to 30% increases in construction costs. The city has considered increasing funding to some of those projects, he said.

About half a dozen large loans are in similar troubled circumstances, Marquez said. She added that officials were considering whether to foreclose on the properties owned by Acevedo’s partnerships or negotiate another solution.