Bell city manager calls state audit unfair, defends reform progress

The city manager of Bell called unfair a state report critical of the town’s progress after a massive corruption scandal.

State Controller John Chiang issued his final audit on Bell on Wednesday morning, nearly three years after the scandal uncovered overpaid city leaders, overtaxed residents and other financial mismanagement.

“Bell’s new leadership deserves credit for changing the culture of city hall by emphasizing transparency and inviting more citizen participation in its decision-making,” said Chiang. “However, the potential for fiscal mismanagement and budget failure remain high until they address the major gaps found in their accounting, reporting, and other management practices.”

FULL COVERAGE: Corruption in Bell

Among the audit’s findings, Bell currently has a negative cash balance, caused in part by the city’s move to stop collecting the excessive taxes. Bell promised to refund more than $3 million in overpaid taxes to residents and businesses, but auditors found that the city had not done so.

Auditors also faulted the city for not implementing more than 20 recommendations the controller’s office made after the corruption scandal.

City Manager Doug Willmore said the audit just “makes it even more challenging to rebuild and regain trust from residents.”

DOCUMENT: Read Bell response to audit

The city manager said Bell has made enormous strides, considering where it began, and said some of the conclusions reached in the report were off or wrong.

“I think the [city] council members know this is not a sprint, but a marathon,” he said. “We inherited a financial mess and we’ve done a lot of work and there’s still a lot of work to do.”

The city didn’t adopt all the recommendations the state had suggested in 2010 because some of them were subjective and didn’t benefit the city financially, Willmore said.

“We prioritized them based on what’s more important for the city, and that’s the context behind all the other actions we’re taking,” he said.

For example, the city chose to address a $38-million bond debt. More than twice the size of Bell’s operating budget, the loan was used to purchase land near the 710 Freeway.

The city defaulted on the bond and owed $13 million, which would have bankrupted the city. But the firm, Dexia Credit Local, an arm of a European bank, recently wrote off the debt following long negotiations with the city.

“I’m sorry, but that’s more important than any recommendation the state controller gave,” Willmore said. “I think it’s a premature conclusion they made. I think at the end of the year, you’ll see the city dramatically different .… The financial state will brighten by the end of the year.”

Assemblyman Anthony Rendon, who represents Bell, agreed that more time is needed, but the city was on the right path. In a statement he said, “The crisis in Bell was not created in a year, so I doubt that it will be completely solved any time soon considering the overwhelming number of fiscal issues in question combined with a struggling local economy.”

“I have hope and confidence in the new leaders of Bell to work diligently to follow the state controller’s advice to eventually get the city back on its feet.”

In March, a Los Angeles jury convicted five of six former Bell City Council members of stealing from the working-class city.

Former City Administrator Robert Rizzo, who many believe was the mastermind of the corruption, and his assistant, Angela Spaccia, will be tried later this year.

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hector.becerra@latimes.com

Twitter: @LATimesHekutor