Citizens group looking at loan

Dave Brooks

A citizens committee is trying to determine how money earmarked by

voters for infrastructure was used to pay off loans on several

controversial capital improvement projects without anyone noticing

for two years.

In April, the Public Works Commission, a seven-member body

appointed by the City Council to oversee the Public Works Department,

discovered that nearly $5.4 million from a voter-approved

infrastructure fund was being used to make an annual loan repayment

on the struggling Sport Complex, beach improvements and an emergency

communication system.

Commissioner George Mason said past audits of the fund only listed

how much each city department had been allocated. Commissioners

discovered the money was used for loan repayments after requesting an

itemized accounting of the fund, which is supposed to earmark 15% of

the city’s general fund for infrastructure-related improvements.

The discovery sparked a debate at City Hall about what is

considered infra- structure. Public Works Commis- sioner Dick Harlow

said voters believed the money would be used to fix streets, sewers

and storm drains. Huntington Beach budget analyst Dan Villella said

infra- structure could mean a number of things, including buildings.

About $2.5 million from the infrastructure fund is now used to

make payments on work done on the Sports Complex, and for beach

improvements. The Sports Complex was originally intended to pay for

itself, but hit a number of snags that city officials are still

trying to correct.

Former Community Services Director Ron Hagan hired and gave Salem,

Ore. contractor Joe O’Connor $1 million to build batting cages,

roller hockey rinks and other amenities at the Sports Complex.

O’Connor and his crew completed the bulk of the work, but hit several

construction snags and eventually abandoned the project. The city

filed a lawsuit against O’Connor to recover the money, but in a

separate legal spate with a Kalamazoo Soccer club owner, O’Connor

testified that all of Huntington Beach’s money was gone. New

Community Services Director Jim Engle is now working to bring a new

contractor on the project to get the job completed.

Despite the past problems, Mason said city officials have been

candid in recent weeks about how the infrastructure money is spent.

“It appears that the city is playing open with it, no one is

hiding anything,” Mason said. “It just never popped out at anyone.”

Just how much money from the 3-year-old fund has been spent on

loan repayments is unknown. Acting Public Works Director Paul Emery

plans to release a full accounting of the money by the end of the

week.

“Basically it looks like the practice of charging against the 15%

fund started shortly after it was approved,” Mason said.

Emery’s report could also show which public officials made the

decision to divert the money. Monday, he would only offer vague

details about the issue.

“It was a decision made as part of administration, and it was

based on the charter,” Emery said.

About 57% of Huntington Beach voters approved the measure in March

2002, requiring the city to spend 15% of its annual $150-million

general fund budget on infrastructure needs. The law was passed one

year after an ad-hoc committee released findings that the city faced

more than $1 billion in deferred maintenance costs over the next

decade.

“Right now we need to focus not on who made the decision, but what

has been the impact,” Mason said. “If at the end of this thing,

there’s been a detrimental impact, the question is: ‘What are we

going to do about it?’”