Building Agency’s Soliciting of Funds Is Halted

For years, Los Angeles Building and Safety Department officials have been soliciting contributions for a “charity and special events” fund from developers, raising ethical concerns from the mayor’s office and others who called it a conflict of interest.

The practice came to light this week after the department held a “casino night” fundraiser Monday at the White Lotus, a Hollywood nightclub. Guests paid $30, and some construction and development companies paid undisclosed amounts to be listed as event sponsors.

But after learning of the event, Mayor Antonio Villaraigosa’s office ordered that such fundraising “must immediately cease,” according to a letter the mayor’s attorney sent Wednesday to Andrew Adelman, general manager of the department.

On Thursday, Building and Safety Assistant Bureau Chief Robert Steinbach said the department would prohibit its employees from soliciting money for charity.

Steinbach also said the agency would return about $7,800 of the nearly $12,800 in donations it took in for the casino night. Most of the remaining money was used for party expenses, he said.

“Our department does not want to be in the position to be accused of improprieties,” Steinbach said. “There’s no profit for the department in this.”

The agency wields tremendous power over developers. Its blessing is essential for new construction or remodeling work in the city. The department also regulates seismic, electrical and plumbing work and enforces zoning codes.

Thomas Saenz, counsel to Villaraigosa, told Adelman in the letter that the mayor’s office was “very concerned” that seeking donations from businesses and individuals in the building trades “may be perceived as coercive.”

City Controller Laura Chick also raised concerns in a telephone interview Thursday, calling the arrangement “an inherent conflict-of-interest problem.”

“If you’re a builder and you need to rely on the Department of Building and Safety to sign off on permits ... and they ask you for something and you say no, then you’re left with the feeling that ‘I’m going to have difficulty the next time I go to this department for something,’ ” she said. “There’s a sense of obligation that you’d better pony up.”

The charity fund is not registered as a nonprofit. In addition, the casino night organizers did not seek a required fundraising permit from the Los Angeles Police Commission, according to Cheryl Jantz, officer in charge of the commission’s charitable services section.

As a result, details of how much the companies donated and how much the department spent on the event were not available.

Registered charities file federal disclosure forms that detail income and expenses. A police permit would have required organizers to file a report that detailed all receipts, expenses and distribution of proceeds.

Steinbach said he would make details of the 17-year-old fund available for public inspection next week.

He said the money in the fund is paid to such charities as the March of Dimes, the United Way and the Red Cross. Some resources in the fund help pay for other department fundraising events, he said.

Steinbach sent out invitations for the event on city letterhead dated Oct. 7.

He said the mailing list was not taken from department databases, but was based partly on Internet research of businesses that might be interested, including architects, engineers and contractors.

The letter encouraged recipients to become sponsors or participants. “Should you be interested in sponsorship, please contact me so we may discuss the opportunity to support the event and our charitable organizations,” Steinbach wrote.

A flier advertising the event also listed the names of building inspectors in regional offices as contacts for donors.

Guests at the White Lotus event played blackjack, Texas Hold ‘Em poker and craps, and winners received chips redeemable for tickets to gift raffles, Steinbach said.

That arrangement, though common at charity fundraisers, might have violated California gambling laws, said Teresa Schilling, a spokeswoman for the state attorney general’s office.

She said the event’s entertainment would be considered “controlled games,” which are allowed only in licensed venues such as casinos and card rooms.

Steinbach said that Building and Safety employees made up the majority of the attendees, but that a number of others were there, including attorney and lobbyist Mark Armbruster.

Armbruster has filed reports with the city Ethics Commission indicating that he has lobbied Building and Safety this year on a number of real estate projects in Los Angeles.

Walking out of the White Lotus on Monday, Armbruster dismissed the idea that guests were gaining any kind of privileged access.

“For $30?” he asked. “Thirty dollars seems pretty inexpensive. I thought it’d be fun, and it was.”

At the check-in table, event sponsors were listed on a large placard. Among them were T. Viole Construction Co. of Tarzana, developer Dennis Needleman of Los Angeles and MWH Development Corp. of Calabasas.

T. Viole recently finished building a parking garage at the Otis College of Art & Design and is erecting a self-storage warehouse in Sylmar, according to college officials and the developer’s website.

Needleman is planning an upscale condominium project south of downtown Los Angeles.

MWH Development and its president, Mark Handel, hope to build homes on the Verdugo Hills Golf Course in Tujunga. The company also has plans to construct single-family subdivisions in Pacoima and Sylmar, according to its website.

Representatives of the three companies declined to comment or did not return calls Friday.

Adelman, the Building and Safety general manager, met Wednesday with Saenz and Deputy Mayor Robert R. “Bud” Ovrom to discuss the casino night.

According to Saenz’s letter, Adelman said the department had “followed the same charitable fundraising practice for many years.”

Officials from the mayor’s office told Adelman they wanted the department to revise its donations policy by Tuesday and provide a “complete analysis of all nonemployee donations to the event.”