Tuite Funds Held Up by City Council : Pension: Payment of $335,000 is part of costly buyout negotiated by former CRA head. He threatens lawsuit.

Los Angeles City Council members, angered that former Community Redevelopment Agency chief John Tuite negotiated a lucrative buyout deal before stepping down last April, blocked payment Wednesday of his pension benefits.

Tuite, in a tense confrontation with the council, defended his contract and threatened to sue the city for emotional distress, attorney’s fees and interest for the unpaid pension, which was due on June 28.

“You may not like the terms of my contract,” said Tuite, 58. “But no amount of shouting, belittling or badgering of me will drown out the fact that your agents signed a legitimate agreement. When they signed it, you signed it. You empowered them to do all the things they did, not just the ones you like.”

But council members, who were frustrated earlier this year when they discovered they had no power to overrule the expensive buyout, used a loophole in city law that allows them to oversee CRA fund transfers to block final payment to Tuite.

“You can’t make me endorse and have my fingerprints on this deal,” said Councilman Zev Yaroslavsky, chairman of the council’s Budget and Finance Committee, who asked his colleagues to block the deal. “I will not be a party to this.”

The 7-5 vote in support of Yaroslavsky was one vote short of what was needed to deny outright the CRA’s request to transfer $398,000 from one account to another. Without the transfer, the agency does not have enough money available to make a $335,000 lump sum pension payment owed to Tuite, who was paid $433,000, plus $39,000 in vacation pay, when the deal was signed.

Instead, council members voted to “receive and file” the request, in effect rejecting it.

In response, Gloria Allred, Tuite’s attorney, said she plans to file a claim against the city and the CRA today. A claim must be filed, and rejected, before a lawsuit can go forward.

“Today is a day of shame for the city of Los Angeles,” Allred said outside council chambers following the vote. “Every secretary, every plumber, every carpenter, every city employee should be shaking in their boots because today the City Council (said it) is not going to honor pension rights.”

If the debate becomes a protracted legal battle, Allred said, the city could end up spending three to four times what currently is owed.

Five council members urged their colleagues to allow the transfer, noting that the city’s attorneys have said Tuite holds a valid buyout contract.

Councilman Nate Holden said after the meeting that he intends to try to get the eight votes needed to approve the funds transfer.

“They are going to clean our clocks if we let this go to court,” he said.

Tuite headed the huge urban renewal agency for four years until he was pressured into retirement last December. Critics complained that the CRA had focused too much on downtown redevelopment and had neglected the interests of homeowners, small businesses and the homeless.

Following six weeks of closed-door negotiations late last year, the agency’s board voted Dec. 28 to approve a buyout for Tuite in exchange for his leaving the post 18 months before his contract expiration date. Had Tuite taken pension payments over a 30-year period, the deal would have cost the agency $1.7 million.

Instead, Tuite surprised the agency’s accountants by electing to take his pension payment as a lump sum. As a result, the CRA did not have enough money in the proper account to make the payment, forcing it to go to the council for permission to move money from other accounts.

After taxes are deducted from the $435,000 lump sum payment due Tuite, the agreement calls for him to receive $335,000 more.

Councilman John Ferraro bristled at Tuite’s suggestion that he had earned the pension payment.

“It’s obscene that you would think that you had earned a pension of that magnitude for working 4 1/2 years for the city of Los Angeles,” Ferraro said. “What did you have on those commissioners that they had to pay you to get out of there?”