Represent!

Politics, government and public life for Southern California

The city of Bell keeps paying a 'Rizzo Tax' long after corrupt officials go to prison

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The last of seven Bell city officials convicted in a major public corruption scandal was sentenced last week. But the financial crimes committed by the former Bell officials left the tiny city in Southeast Los Angeles County deep in debt,  its local economy in tatters.

"One of the big crimes of Robert Rizzo isn't just what he did, it's what he left behind," said Rizzo successor, City Manager Doug Willmore. "He left this small working class city $137 million in debt."

Willmore calls that debt and other ongoing financial burdens on residents, "The Rizzo Tax." Rizzo is now serving a 12-year prison term for public corruption and tax evasion. Possibly the greatest damage he did during his time in office was to the city's business base.

Willmore said so many businesses left town that the city's sales tax revenue these days is half what it was a decade ago. Sparse retail activity means low sales tax revenue - and that's money that cities rely on to pay police and firefighters and to provide parks and maintain roads.

Just steps from Bell City Hall, Willmore shows off the retail wasteland at the city's busiest intersection.

"So we're on the corner of Atlantic and Gage, which for Bell, is really our Main and Main," Willmore said.

The intersection should have four prime corner shopping parcels, but instead you'll find an underperforming shopping center, a closed car dealership and a couple of vacant old buildings that the city owns and plans to tear down.

Rizzo came to Bell in 1993 and made some strange requests of businesses, according to Willmore.  He said Rizzo would tell business people to pay license fees in cash to him personally at City Hall. Some business owners got sick of the shakedowns and left, Willmore said. That was bad enough, but big new retailers that could have bolstered the city's sales tax receipts also stayed away.

"While other cities have major sales tax payers like a Costco, like car dealer, like Target and so on, some of our largest sales tax payers are gas stations," Willmore said.

Leonila Perez brings her kids to play at Veteran's Memorial Park in Bell, but she doesn't shop in Bell.

"There's not that many stores to shop at. I would either go to Target, or the new Walmart that was done,"  Perez said. That new Walmart is in South Gate.

Residents of Bell are paying more every time they shop in neighboring South Gate. Sales taxes there are 10 percent, a full percentage more than in Bell. 

Garrick Brown, who directs retail research for Cassidy Turley, a commercial real estate firm, says developers talk among themselves about problem cities and steer clear of those, always weighing the risks of doing business in various locations. Some cities offer incentives for development - "whereas at this town, we've got a layer of graft to deal with... so what happens is that nothing gets built," Brown said.

Brown says Bell revamped a shopping center in 2004, but has built no major new retail since the late 1990's. The city has no inventory of top grade shopping space to offer retailers.

 Brown says Bell's history harms its future retail prospects.

"Bell is unique. There's usually instances of graft that pop up here and there, but I don't know of any other city where that's the one and only reputation they have," Brown said.  He thinks only a major reputation makeover and development-friendly policies could help make Bell attractive to retailers.

The ruins of Rizzo's biggest scam are at the southeast end of the 2.5 square mile city. Rizzo and the city council persuaded voters in 2003 to let the city borrow nearly $50 million to buy a big lot with plans to build a sports complex.

"This is one of the key lots in the whole city -- and you can see -- weed strewn. Residents come to Council meetings and ask about this lot," Willmore said.

The sports complex was never built.  The lot is closed off by a high, locked fence.

However, the Los Angeles Times reported that some $26 million was spent of the nearly $50 million in bond funds voters authorized the city to borrow.

"That's how the high salaries were financed," Willmore said. "It was a pyramid scheme of borrowing money and eventually these citizens were going to have to pay this off with higher taxes."

The city is negotiating a fine with the IRS over the unbuilt sports center and the SEC is also investigating, Willmore said.

Through a series of one-time measures like selling warehouse property, returning unspent borrowed money and renegotiating deals, Bell has brought its Rizzo-era debt down to $74 million dollars.  That's about six times the city's annual budget, or about $2,000 for every single Bell resident.

"It's going to be quite a few years before people get past what happened," Willmore said. "The fact that Rizzo let the city crumble to that level over his 20 years, I think is really one of the untold stories about his regime here."

Two years into the job, city manager Willmore is focused on rebuilding the local economy.   A key part of his strategy involves the closed auto parts building on Atlantic and Gage Avenues.

Rizzo used nearly $5 million of the borrowed parks bond money to buy the run-down Western Auto Parts building at an inflated price from a business associate.  Willmore expects to demolish it soon and offer the land for a development that he hopes will launch Bell's retail renaissance.

The City Council has approved financial and tax incentives to bring in businesses and will soon hire a development specialist to help craft a new narrative for the future of Bell.

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