California City's $800,000 Manager Quits Amid Outcry

When Bell, California, resident Roger Ramirez heard in 2008 that the manager of his town of 38,000 residents may be the state’s highest-paid municipal employee, he asked City Hall. He got only part of the answer.

City Clerk Rebecca Valdez sent him a one-page memo that gave Chief Administrative Officer Robert Rizzo’s annual salary as $185,736 and that of city council members as $8,076.

“I should have asked for other benefits,” Ramirez, an emergency-call operator, said in a telephone interview. “I went in and just asked for the salary and that’s what they sent me.”

Rizzo resigned July 22 after the Los Angeles Times reported July 15 that his total compensation was almost $800,000 a year and that Bell’s part-time council members took in almost $100,000 annually, mostly by serving on city-affiliated boards and commissions. Had Rizzo been an executive at a public company, his total compensation would have been available on the Securities and Exchange Commission’s website, a convenience not open to citizens or bondholders of local governments.

“Transparency, there is none,” former Los Angeles Mayor Richard Riordan said of municipal disclosure in an interview. “The things they hide from the public are just monstrous.”

California Attorney General Jerry Brown, a Democrat running for governor, and the California Public Employees’ Retirement System, which administers the state’s pensions, said on July 22 that they would investigate compensation paid by California local governments.

Serious Questions

“These outrageous salaries in Bell are shocking and beyond belief,” Brown said in a statement. “With record deficits and painful budget cuts facing California cities, astronomical local government salaries raise serious questions and demand a thorough investigation.”

The financial regulatory overhaul that President Barack Obama signed this week calls for a two-year study of municipal finance disclosure, including whether to scrap a 1975 law that prevents the SEC from imposing the same requirements on local governments that it does on corporations.

“One of the issues we are going to look at very, very closely is disclosure in the markets,” SEC Commissioner Elisse Walter said in an interview last week. “We’ve heard from market participants that there are real questions as to both the quality, and above all, the timeliness of that disclosure.”

Inquiry Under Way

Dave Demerjian, head of the public integrity division of the Los Angeles County District Attorney’s office, said in an interview that his office had begun an inquiry into Bell council members’ pay, which he said was $8,083 monthly, or $96,996 a year. He didn’t have figures for Rizzo. Valdez, the city clerk, didn’t respond to a request for comment.

Bell, 10 miles (16 kilometers) south of Los Angeles, has a largely Latino population with a per-capita income of $24,800 in 2008, according to the city’s 2009 annual report. That compares with an average of $32,819 nationwide, 2010 figures from the U.S. Bureau of Economic Analysis show. More than a quarter of its residents live below the poverty level, according to the website City-Data.com. The city has about $150 million in debt outstanding, the annual report says.

The resignation of Rizzo, Assistant City Manager Angela Spaccia and Police Chief Randy Adams July 22 came after a six- hour closed session of the council. At least 200 citizens waited in and outside City Hall, clapping for council members to end their private meeting. One wore a T-shirt that read “My City Is More Corrupt Than Your City.”

Interim Chief Administrative Officer Pedro Carrillo read a statement about the resignations before the meeting ended. Mayor Oscar Hernandez left without comment.

No Severance

Bell City Attorney Edward Lee said the three were resigning without severance. The Times reported July 22 that Rizzo may become the highest-paid retiree in the Calpers system, with an estimated pension of $600,000 annually. He was Bell’s city manager for 17 years.

“There’s no way we can legally affect those,” Lee said when asked by a resident about the pensions.

After the meeting ended, some attendees chanted “recall” and demanded the mayor and council resign.

“I’m not satisfied,” Sandra Orozco said in an interview. “They’re the ones who should step down.”

Hernandez, the mayor, released a statement yesterday.

“We recognize that today’s economic climate and the financial hardships so many families are suffering put our past compensation decisions in a new light,” he said. “To the residents of Bell, we apologize.”

$463 Documents

Nestor Valencia, who ran unsuccessfully for City Council in 2007 and 2009, said he, too, had trouble getting information on city salaries. After his request in February, he was told he would have to pay $463 for the documents, he said. Valencia, who is unemployed, didn’t follow up.

“You have to have money and time” to get information, Valencia said in an interview at the council meeting.

After the meeting, council member Lorenzo Velez, who was appointed last year, answered questions. The 55-year-old heavy- machinery operator said he didn’t receive the same compensation as other council members and wasn’t aware of their pay until the Times report. He said the others should resign.

“Don’t close your eyes to the everyday business of your city,” Velez said.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net.

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