The interim chief of the city's housing authority told employees that due to budget constraints they would have to give up all staff events and accept other limitations on spending, according to a memo obtained by SoCal Connected producers.
The announcement to staff came before media reports that focused on high spending for travel and expensive restaurants and before news broke that ousted chief Rudolf "Rudy" Montiel would walk away with $1.2 million in severance pay, according to CEO Ken Simmons, who sent the e-mail this morning.
"Although a great morale booster, we feel prudent to discontinue such activities as we deal with a strained budget," Simmons wrote.
In the memo, Simmons noted that the agency also had to implement limitations on travel and eliminate local luncheons. He specifically mentioned the year-end holiday party, a "Bring your sons and daughters to work" event, and a Service Awards luncheon. Receipts for many of these events over the past few years can be viewed in our interactive database.
The Los Angeles Housing Authority, or HACLA, is the agency charged with overseeing housing for the poor. It has come under fire this year following multiple media reports, including two investigations at SoCal Connected (here and here), that revealed lavish spending on the part of executives and commissioners.
The Los Angeles Times also revealed this weekend that Montiel, the former HACLA chief, would be receiving a severance package worth $1.2 million. Montiel had been fired earlier this year when it came to light he had been misusing public funds.
In the HACLA memo, Simmons also wrote that he wanted to provide a more detailed explanation of Montiel's severance pay.
Because Montiel had filed a wrongful termination lawsuit against HACLA, battling it out in court would be too risky for the agency, Simmons wrote. Instead, the agency had reached a settlement of $645,000, more than half of which would be "covered by Insurance [sic] and the rest of the agency."
Montiel's contract agreement, according to Simmons, was worth $540,000 for 18 months salary and a housing allowance.
City officials have responded swiftly as developments to the story pour in.
"HACLA’s actions show a total disregard, not only for the taxpayers and the current economic climate, but for the communities that they supposedly serve, Los Angeles’ most vulnerable residents,” said Councilman Dennis P. Zine, chair of the city's audits committee.
In the city council meeting Tuesday, Zine filed a motion calling the current HACLA chief to account for the expenditures. Simmons is expected to appear at next Tuesday's city council meeting for questioning.
“As revealed in the [media] reports, this agency has breached the public trust and the need for oversight is glaring. They should be ashamed to call themselves public servants," Zine said in a statement released by his office.
Meanwhile, City Controller Wendy Greuel sent a letter last week to HACLA officials informing them of the need to broaden her investigation after she found more $300,000 per year in travel expenses for 2009 and 2010.
In the HACLA memo, Simmons criticized the media reports for a one-sided approach.
"The media stories leave out the fact that this agency has made incredible accomplishments in the last six years and continue to maintain its high performer rating by HUD, thanks to your hard work; these served as the main reason for the employee event."