Refund to Builder Called ‘Gift of Public Funds’

A controversial and unprecedented refund of $220,904 to a prominent developer and campaign contributor was approved Tuesday by the Los Angeles City Council, despite a charge by one member that it was an “outright gift of public funds.”

Under an agreement approved by the council, Goldrich-Kest Industries, headed by Jona Goldrich, would be refunded most of a special fee that was levied on a 212-unit apartment complex under construction in the mid-Wilshire area.

The Recreation and Parks Commission, which controls the so-called Quimby fees collected from developers to create new parks, opposed the refund. Assistant City Atty. George Buchanan said the council can only request and not order the commission to return the money. However, he said the city could pay the funds out of its regular operating budget.

Parks Department planning officer Alonzo Carmichael said after the meeting that the staff still opposes the refund.

“We couldn’t find any legal reason the (parks) department should have to pay it,” he said.

He added that no other developer has ever received such a refund.

“It’s really a gift . . . special legislation for a developer,” Carmichael said.

Tuesday’s agreement is an outgrowth of the council’s approval last November of an ordinance that permitted developers of certain projects financed by city bonds to recover their park fees in return for “additional consideration.” However, narrow limitations were placed on which projects were eligible, and so far, the Goldrich project is the only one that has qualified, city staff members said.

In return for the refund, Goldrich, a longtime supporter of Mayor Tom Bradley and a generous campaign contributor to several council members, would reduce rents on 42 low-income units in the Museum Terrace apartments at 6th Street and Curson Avenue. The average reduction would be about $33 on the $400 to $500 monthly rent, according to city staff.

Pushing the refund for Goldrich was Councilman John Ferraro, whose district includes the apartments.

“I wanted lower rents,” Ferraro said. “ . . . We have parks in that area; we don’t need additional parks.”

Ferraro also argued that apartment developers normally pay a dwelling unit tax, which would have amounted to only about $42,000 for Museum Terrace. Goldrich paid the higher Quimby fee, because the development required a subdivision. Warren Breslow, a partner in Goldrich-Kest, said the issue is one of equity.

Assistant City Atty. Norm Roberts, who specializes in land-use matters, said, however, that other developers have paid the Quimby fees under similar circumstances, and that the only refund he could recall had been to a charitable organization. Under the refund agreement, Goldrich would pay the lower dwelling tax, in addition to the rent subsidies.

Concern Expressed

Several council members expressed concern about the precedent the refund would set.

“I don’t like the idea of messing with Quimby fees,” Councilwoman Joan Milke Flores said.

Councilman Ernani Bernardi charged that the agreement was “blatant special-interest legislation” and “an outright gift of public funds.” He said Goldrich-Kest would earn more in interest on the refund than it would have to pay out in rent reductions.

An effort by Councilman Howard Finn, chairman of the Planning and Environment Committee, to send the matter to the Recreation and Parks Commission for review was narrowly defeated on a 7-8 vote.

The agreement was then approved on an 11-4 vote, with council members Bernardi, Flores, Finn and Marvin Braude voting no.