3:54 p.m. - The city council today called housing authority officials to task and demanded a full report on the agency's spending activities, including those of certain non-profit foundations it pays for managing its public housing units.
Chief Operating Officer Ken Simmons, who resigned last week as acting CEO of the Los Angeles Housing Authority, told council members that staff and commissioners had not, in fact, used federal taxpayer dollars to run up questionable expenses such as pricey dinners, hotel stays and limousine rides. Instead, those activities used local revenues and were charged to third-party foundations the agency had hired to manage its properties, he said.
Council members Dennis Zine and Bill Rosendahl asked whether it would be possible to include those organizations in an expanded audit of the housing authority.
"To me that is washing money so that we can spend money the way we want and not be accountable for it," Zine said.
Just hours earlier, City Controller Wendy Greuel had released an audit showing that "Agency officials were reckless with taxpayer dollars and spent lavishly during the worst economic recession since the Great Depression." (Read the audit here).
"Whether or not it is officially federal dollars, it is taxpayer dollars," Greuel said.
The housing authority, which operates under a nearly $1 billion budget and is tasked with providing homes for some of the city's poorest residents, contracts with outside non-profit organizations to manage properties that it owns.
The list of non-profits includes the Los Angeles LOMOD Corporation, which contracts with all 10 counties in Southern California. LOMOD oversees 739 contracts representing 45,660 affordable rental units, according to its website.
LOMOD and other non-profits give money raised from rent collection back to the housing authority to help fund its mission. Such revenues account for roughly 8 percent of the housing authority's overall budget, the rest coming from federal funding. It was money from this local slice of the pie that staff and commissioners used to buy expensive gifts and limo rides, Simmons told the council.
Simmons acknowledged that such spending was unusual and claimed that he had reported what he believed to be outrageous or illegal expenditures to the district attorney's office, though he declined to offer proof out of concern for compromising a federal investigation.
At one point, Zine asked Simmons why he continued to authorize such spending as second in command.
"I took my argument to the CEO," pressing that these were not legal expenditures, Simmons said. "It gets to a point where you're arguing with your boss and he says this is the way we're going to do things."
Mitch Kamin, the chair of the housing authority's board of commissioners, told the council that he intended an expanded audit to include all connected foundations. He said he had already taken steps to reform the housing authority, including an immediate end to staff and commissioner travel unless directly related to agency business and absolutely necessary. Kamin also said he was in favor of the housing authority falling under the jurisdiction of the city's ethics commission.
In March, a SoCal Connected investigation revealed top officials in the authority had been running up questionable charges at taxpayer expense. Two commissioners and then-CEO Rudolf Montiel were ousted in response.
But a seven-month follow-up investigation by SoCal Connected revealed that the spending went much deeper than was initially reported. SoCal producers analyzed thousands of pages of credit card statements, receipts and other documents, which showed that executives and their assistants had spent thousands on fine dining, travel and gifts. (Database: view the receipts).
Just days after the investigation aired, the Los Angeles Times reported that the housing authority, under acting CEO Ken Simmons, had agreed to a severance package worth $1.2 million for Montiel.