City of Bell says it has terminated 'loan program' that lent nearly $900,000 to city employees

The California city of Bell has ended a loan program devised by the former city administrator whose exorbitant salary sparked a scandal in the small working class city, interim city manager Pedro Carrillo said Tuesday.

"Since learning of the 'loan program' it was immediately terminated," Carrillo said in a statement. "We are in the midst of determining who benefited from the program, how much money was loaned, and how much money remains to be paid back to the city of Bell," the statement said. "Once that determination has been made, payment will be immediately requested."

The Los Angeles Times reported earlier Tuesday that the city gave nearly $900,000 in loans to officials, employees and at least two council members in the last several years.

The Times reported that former City Administrator Robert Rizzo received two loans of $80,000 each. Councilmen Oscar Hernandez and Luis Artiga borrowed $20,000 each but didn't report the loans on their financial disclosure forms, as required by state law.

Artiga said Rizzo told him about the loan program when he was having financial difficulties last year.

"I cannot think of a reason to provide loans to a council member," said David Demerjian, head of the Public Integrity Unit of the Los Angeles County District Attorney's Office, which is investigating Bell.

Carrillo said at least 50 people received loans over the last eight years.

City officials said no documents show that the City Council approved the program.

After a meeting that dragged on into Tuesday morning, the City Council also unanimously voted to lower property taxes after a state audit showed it overcharged residents to cover pension costs for exorbitantly paid staffers.

The council voted to give control over the next municipal election to Los Angeles County and cut copying fees for public records.

A state audit last week found Bell had overcharged residents more than $3 million during the past three years to pay for pension obligations.

The finding came after prosecutors launched investigations into high salaries paid to the city's leaders, including nearly $800,000 to the former city manager.

Bell is a community of about 37,000 people located about 10 miles south of Los Angeles.

Hundreds of residents showed up at the meeting, demanding four of the five council members resign and reprimanding the panel for turning Bell into what was called an epicenter of corruption.

"If you have any dignity, you need to resign," resident Violeta Alvarez said during the public comment period.

A man dressed as a clown referred to the lawmakers as the "City Clowncil."

Councilman Lorenzo Velez has avoided the anger directed at his colleagues because he was never drawing the high salary of nearly $100,000 a year they were, and he was one of the early supporters of reform in the city.

For the first time in the council's tenure, a court reporter was hired to record the meeting.

The reduced taxes will apply to those due in November. If a home has an assessed value of $400,000, the owner will save $360 a year under the revised pay structure.

Artiga said the panel also plans to ask the state if it can refund the money directly to taxpayers.

The city manager, police chief and assistant city manager all resigned last month shortly after the scandal broke.

A group called the Bell Association to Stop the Abuse staged a rally before the meeting. The public portion of the meeting ran past midnight, then the council went into private session, adjourning shortly after 3 a.m.

During the public part of the meeting, the council named Jamie Casso of the Meyers Nave law firm as interim city attorney and Pedro Carrillo of Urban Associates Inc. as acting city manager. Velez voted against both appointments.

"We will take appropriate action to restore dignity, trust and faith in City Hall," Casso said in a statement he read at the meeting.