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Owners Fight Annexation Of 'Business-Friendly' Vernon

LOS ANGELES (CBS) — County supervisors voted on Tuesday to seek state legislation to limit the number of municipal employees living in city-owned housing to 10 percent — an effort aimed at scandal-prone Vernon but which would apply to other towns, as well.

The largely industrial city, established in 1905, is home to more than 1,800 businesses, including a city-owned power plant. But only about 90 residents live there, all in housing owned by the city.

The city has been controlled by a small group for years, operating like a "fiefdom," according to District Attorney Steve Cooley, who has called for its disincorporation.

The most recent scandal facing the municipality involves outsized compensation and retirement benefits paid to city officials, now the subject of investigation by the state Attorney General's office.

Supervisor Gloria Molina said the hope is that a limit on the number of city employees in city housing would allow housing units to be offered new residents not beholden to long-entrenched officials.

Business owners lined up to speak out against Molina's proposal and efforts to disincorporate or annex the tiny city.

Vernon's low crime rate is just one benefit of doing business there, according to Robert Moeck of Douglas Steel Supply. The city's fire department is Class I rated, one of only 60 in the country, which creates low insurance rates for business, he said.

"Cities weren't made for the purpose of running businesses," Molina responded.

"Vernon was," business owner John Norton shot back.

Supervisor Michael Antonovich was sympathetic to the business owners' arguments.

He urged his colleagues to work to maintain a "business-friendly environment ... not bogged down with taxes, regulations and fees" while pursuing legislation.

An open letter to Molina from Vernon City Administrator Mark Whitworth asked the board to allow the city to work through its problems without interference.

"Our city has received intense scrutiny of late, and some for good reason," he wrote. "We accept that criticism and had been working hard to resolve many of these issues long before they became the focus of scrutiny."

The city has changed its city attorney function, cut compensation and posted salaries on its website, Whitworth said. The municipality has changed policies and is reviewing others, including a long-term city housing policy, the city administrator added.

Whitworth noted that the city generates $300 million in state and local tax revenues and supports businesses which add $5 billion annually to the regional economy. More than 13 percent of workers who live in Maywood and Huntington Park work in Vernon, according to a Los Angeles Economic Development Corporation study cited by Whitworth.

Despite objections, the board voted 4-0 to ask its legislative advocates to work with state lawmakers on a bill to implement Molina's proposal.

The proposed legislation would also require an amendment to the state Constitution, which would be subject to vote on a statewide ballot.

"They need to be a better neighbor," Molina told business owners. "They need to be a good municipal government."

Three former Vernon city officials have faced criminal charges in recent years. The most recent case involves ex-city administrator Donal O'Callaghan, who has pleaded not guilty to a grand jury indictment charging him with three felony counts stemming from financial deals involving his wife and the municipality.

Another former city administrator, Bruce Malkenhorst, is awaiting trial on felony charges of misappropriation of public funds.

Leonis Malburg, who had been mayor of Vernon for more than 50 years before resigning last year, was sentenced in January to five years probation and ordered to pay $579,000 in fines and restitution in a voter registration fraud case. His wife got three years probation and $36,000 in fines and penalty assessments.

(©2012 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)

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