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City Controller to Probe Paloma Street Deal | Sudden Exit at $57B County Pension Fund | Inside Stuff on USC, UCLA Business Deans | Doti’s Extra Drama | Beutner’s Third Strike?

City Controller to Probe Paloma Street Deal | Sudden Exit at $57B County Pension Fund | Inside Stuff on USC, UCLA Business Deans | Doti’s Extra Drama | Beutner’s Third Strike?

Los Angeles Controller Ron Galperin has taken a first step toward investigating the city’s lease agreement and choice of an operator for an emergency homeless shelter in Downtown Los Angeles.

Headshot of Ron Galperin, Los Angeles Controller

Galperin’s move comes in response to SullivanSaysSoCal’s coverage of an inexplicably favorable lease deal worth $1.2 million for the landlord of the building at 1426 S. Paloma Street. The controller’s office also will look into a $4 million annual contract for a service provider with a public profile that raises questions about its fitness for the task of operating the proposed 120-bed homeless shelter.

“Homelessness is the biggest crisis facing our city today –we are allocating hundreds of millions of dollars a year to increase housing and services for people in need,” Galperin told SullivanSaysSoCal via email. “Given this context, I find the questions raised to be troubling and to merit at least an initial review by my Fraud, Waste and Abuse Unit.”

The pending probe by Galperin – who’s been elected twice to his post as the chief accounting officer and auditor of the city – is the first signal of concern from an elected official in City Hall over the Paloma Street deal.

The proposal for the lease and service provider at the facility – a warehouse that will be partially converted to a homeless shelter – has been approved by the City Council and Mayor Eric Garcetti on two occasions. The second approval came with a change that saw the city agree to cut the amount of space it leases in half – to 17,900 square feet – but still pay the $35,000 a month in rent it agreed to in an earlier version of the deal.

The $1.2 million value is due over a three-year lease with the landlord, who is identified as Moiz Kaboud and has been tied to prior instances of money laundering and counterfeiting – incidents also uncovered by SullivanSaysSoCal in recent months.

1426 Paloma

The deal also calls for the city to pay $4 million a year to Home at Last Community Development Corp., a nonprofit that apparently plans to employ 60 full-time staff, public documents indicate. The suggested staffing level far exceeds industry standards, according to some experts in the field, and Home at Last representatives have not returned requests for comment. The organization’s website, meanwhile, is largely a boilerplate presentation and lists a building that appears to be abandoned as its headquarters.

Both Garcetti and 14th District City Councilmember Jose Huizar – who initiated the plan for the Paloma Street shelter, on Downtown’s industrial edge – have declined to answer numerous questions submitted over recent months about the shelter’s lease and operations.

Huizar, meanwhile, remains a key subject in a federal investigation of City Hall. The federal probe first became public late last year, when agents of the FBI and IRS raided his office in City Hall, along with a field office and his home in Boyle Heights.

Information from search warrants related to the investigation suggests the scope of the investigation includes other City Hall officials, including aides to Garcetti and 10th District City Councilmember Herb Wesson, who also serves as president of the 15-seat body.


New Angle on Big Story

Here’s reason for everyone throughout SoCal to take an interest in LA’s problems – and you heard it here first:

The homelessness crisis in the City of Angels isn’t necessarily a housing crisis, but it is the biggest real estate story in SoCal – even if the local legacy business media have yet to figure that much out.


Old Angle, New Urgency

Here’s reason for everyone to demand more from local legacy media, which appears to have gone so soft on coverage of LA’s City Hall in recent years that politicians there haven’t had to make sense about money.

It’s apparently gone on long enough that the pols aren’t even able to make sense – and the legacy media doesn’t appear to have the capacity to spot nonsense and break down the numbers.

Consider Garcetti’s recent claim that a record number of people were helped from homelessness to housing last year. He backed away from the claim of a record in an address last week, but did tout that “this past year, more than 21,000 homeless Angelenos were housed across the county, compared to 9,600 housed in 2014.”

Garcetti also proudly proclaimed that the city has “increased our homelessness budget to more than $460 million for housing and services – 25 times what it was just four years ago …”

1st red flag: Garcetti seeks credit for folks moving into housing throughout LA County, an area that extends well beyond his area of responsibility, confusing the basis for comparative analysis.

2nd red flag: The number of people going from homeless to housed since 2014 went up about 120% while the increase in the city budget for housing and services is 2,400%, according to Garcetti. That’s an alarmingly high ratio even before you factor in the city-county overlap in Garcetti’s account.

3rd red flag: The raw numbers come to an increase of 11,400 people helped from homelessness to housing with a corresponding $442 million increase in annual spending by the city. That’s about $38,771 per person – enough to get each a $3,200-a-month apartment for the year.

4th red flag: Garcetti boasted that LA added three times more new housing units last year as any other city in California. That’s not exactly a big deal if you consider the context of LA being about three times more populous than San Diego, the next biggest city in the state.

Those are just a few of the twists that were missed.

It’s time to expect more – from your local government and your local media.

More Reasons to Wonder on Huizar

The 14th District representative isn’t even trying to maintain a pretense of effort when it comes to transparency on public funds.

A formal request under the California Public Records Act for financial information from the Night on Broadway event that drew a reported 250,000 visitors, peddled sponsorships and took fees from dozens of vendors nearly a year-and-a-half ago has been put off several times by Huizar’s office over the past six months.

Huizar’s staff had offered some excuse each time they failed to meet a deadline they themselves had given for providing the information.

But they didn’t even do that much when they failed to provide the information by their latest self-declared deadline of June 14.

That’s six months and counting for public disclosure of whatever money came in and went out on a community festival produced by an elected official who is supposed to work for the public.

Stay tuned to see whether the state law on public records means anything at all.

We can all wonder, in the meantime, how long it takes to concoct a second set of books on an annual festival.

Open Secret: $57B LA County Pension Fund Fires CEO After 6 Months

The local legacy media in general has been remarkably uninterested in recent reports of the firing of Lou Lazatin, who lasted just six months in the post of chief executive of the $57 billion Los Angeles County Employees Retirement Association (LACERA).


Yes – that’s $57 billion, with a B.

And, no, LACERA executives aren’t saying much in the wake of the move.

The dismissal came after the pension fund’s Chief Counsel Steven Rice wrote a memo alleging improper approval of expenses by Lazatin, according to FundFire, a unit of the London-based Financial Times.

Rice has assumed the chief executive’s duties on an interim basis.

The only comment so far from LACERA, which is overseen by two boards – a Board of Retirement and a Board of Investments – has been an official statement that offers no reason for Lazatin’s dismissal.

“The boards thank Ms. Lazatin for her service to LACERA and wish her well in her future endeavors,” the statement reads. “The boards will immediately conduct a national search for a new CEO.”

It seems odd that the departure of the top executive at a $57 billion public pension fund that handles the retirement accounts for employees of LA County and a number of other public agencies would go unnoted by the local media.

The firing had hardly made a stir as of this writing, however, and that seems especially odd in the case of the LA Times, which has documented owner Patrick Soon-Shiong’s familiarity with Lazatin’s work.


Lazatin was “abruptly” fired as chief executive of St. John’s Health Center in Santa Monica in 2012, according to a report in the LA Times. The center’s chief operating officer and most of its governing board also were booted, according to the story, which appeared on December 1, 2012, and noted that Soon-Shiong had committed $100 million to St. John’s and was “shocked and disturbed” by the sudden departure of Lazatin and other members of management.

St. John’s kept the reasons for the management shakeup confidential.

Soon-Shiong, who did not own the LA Times when the shakeup occurred, came up short on a subsequent bid to buy St. John’s, and soon cut ties with the center. He went on to buy Verity Health Systems, which owned a number of healthcare facilities, including St. Vincent Medical Center in the Westlake district west of Downtown LA and St. Francis Medical Center in Lynwood. Verity subsequently declared bankruptcy and was sold off.

Inside Stuff: Trojans Beat Bruins on Hire of Business School Dean

Well-placed sources tell SullivanSaysSoCal that USC topped UCLA in a quiet game of recruiting.


The result: USC’s Marshall School of Business beat UCLA’s Anderson School of Management in the contest to lure Geoffrey Garrett, dean of the University of Pennsylvania’s Wharton School, to the same post here.

The high-profile hire – Wharton resides at the very top of its class nationally and globally – appears to have put a damper on hard feelings over the ouster of Garrett’s predecessor, James Ellis.

The decision to dump Ellis as dean stemmed from accusations of some instances of gender-based discrimination on his watch as dean, without any suggestions that he was personally responsible. The move drew objections from significant numbers of Marshall School students, faculty and donors.

Not all of the hard feelings have evaporated, and Ellis retains a broad base of backers, but USC is apparently set to move on.

Word has it that UCLA’s Anderson School also wanted Garrett but couldn’t match the package that USC put together.

Bernardo, Olian

The Bruins instead promoted veteran Anderson School finance professor and administrator Antonio Bernardo as dean.

That ended a search that took more than a year after Judy Olian left for the president’s post at Quinnipiac University in Hamden, Connecticut.

Garrett is plenty familiar with what he missed by skipping Westwood – he previously did a stint as dean of the UCLA International Institute.

Another familiar note involving Garrett: he also preceded Jerry Green – who previously served on the faculty of the Marshall School and now is on the faculty of the Annenberg School for Communication and Journalism – as executive director of the Downtown-based Pacific Council on International Policy. 

Kamy’s New Classroom

Another impressive hire that got less attention at USC last week: The intellectually circumspect Kamy Akhavan has given up his post as president of nonprofit civic engager and its mission of fostering critical thinking and informed citizenship to become executive director of the Center for the Political Future at USC.

Another cross-town crossover here: Akhavan has an undergraduate and graduate degree in history from UCLA.

Doti’s Extra Drama

Jim Doti will take the stage with a remarkable record of accuracy when he delivers the Chapman University Economic Forecast Update on behalf of the school’s A. Gary Anderson Center for Economic Research.

That’s tomorrow – 2 p.m., June 19 at the Musco Center at the Chapman campus in Orange.

Expect an especially good show from Doti, now a professor as well as President Emeritus of Chapman.

But don’t expect it to come easy.

Doti shed some light on the challenge of this year’s update to the forecast – made every June – when he took a break for a recent chat over a light lunch at the Citrus City Grille, just down Glassell Street from the craftsman bungalow that serves as his office.

Trade disputes with Mexico and China have made moving targets out of tariffs and rendered this forecast especially tough, Doti said. The sheer length of the ongoing economic recovery also adds a new level of uncertainty.

Toss in a president with a leadership style that departs radically from his predecessors, and Doti certainly has his work cut out for him.

Yet something about the look in Doti’s eyes as he ticked off the challenging circumstances over lunch was enough to remind me that this is a guy who climbs tall mountains and finishes marathons.

Here’s betting he meets this challenge, too.

More on Doti’s outlook next week.

Sullivan Says

Plenty of talk around town that the failure of the Measure EE tax hike to secure even 50% of the vote amounts to a third strike in the civic arena for Los Angeles Unified School District Superintendent Austin Beutner, whose resume also counts an aborted run for mayor and a largely inconsequential stint as publisher of the LA Times alongside the fortune he made as an investment banker on Wall Street.