MONTEBELLO (CBS) — City officials in Montebello wasted $31 million in public funds on questionable expenditures,including funds meant to improve blighted neighborhoods spent instead on fancy dinners in Las Vegas, golf, embroidered polo shirts and other “frivolous” items, according to the state controller’s office.

Two audits released Thursday pointed to more bad news for the city as officials look to secure private funding to avoid running out of cash this fall — all amid an ongoing FBI investigation into allegations that it misused federal housing money.

The city of 65,000 east of downtown L.A. has a annual budget of an estimated $50 million.

“At the expense of local job development, street repair, and schools, Montebello has made it a habit to tap legally restricted funds to cover its budget and cash shortfalls,” Controller John Chiang said in a statement quoted by The L.A. Times. “It appears that the City moved money wherever it wanted, whenever it wanted, regardless of the law or the intended purpose of those taxpayer dollars.”

“This is money that belongs to the people,” former Montebello city councilman Jeffrey Siccama told KCAL9’s Dave Bryan. “We’re not a rich city, but these were for projects to help the city boost itself and further itself.”

Siccama, a longtime community activist, said he saw a powerful developer getting insider deals with city officials, who gave away millions of dollars in so-called forgivable loans that don’t have to be repaid if certain conditions are met.

The state controller’s office called on Montebello to reimburse its redevelopment agency nearly
$3.6 million for “ineligible expenditures,” including $3.4 million in transfers to the general fund, as well as golf games and travel for city officials.

Among the questionable charges: a “business lunch” at Chuck E. Cheese’s.

If the city has to repay the money, its financial picture could worsen since it is low on cash and has been called on to repay the federal government for misspent housing funds.

But Interim City Administrator Larry Kosmont downplayed the findings and accused the controller of playing politics by mentioning the developer loans.

“The failure of Montebello isn’t about corruption or anything like that,” said Kosmont. “I think these findings, some of them are right, most of them are inappropriate in my mind.”

Kosmont added the City Council is making progress in reforming the way the city reports its financial dealings, which he admitted has been “sloppy in the past”.

(©2011 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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