By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
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By Dennis Romero
By Jill Stewart
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Stephen Box can neatly trace his metamorphosis from guy helping the Greater Echo Park–Elysian Neighborhood Council to organizer of a middle-class insubordination cum revolution, which began with an unexpected tragedy.
A few years ago, self-proclaimed idealist Box was helping a local leader to oversee Echo Park's neighborhood council elections and mail the ballots to area residents.
But the election chairman, Larry Pickens, died a few weeks before the Echo Park voting was completed. So Box stepped in and paid for the postage to mail out the remaining ballots. It wasn't cheap. $750. He kept the receipts, and assumed that being reimbursed by the city's Department of Neighborhood Empowerment (DONE) in the face of a tragedy wouldn't be that difficult.
"I turned the receipts in," Box recalls. "I waited about a year and kept asking about my money. I even asked [DONE's general manager, BongHwan Kim] about the money, and he told me, 'I don't know what to do. The rule can't be broken.' "
The rule, Box explains, is that he wasn't an Echo Park Neighborhood Council board member and therefore couldn't get reimbursed, no matter how many receipts he showed. "Eventually, the treasurer [of the neighborhood council] said, 'Fuck it! I'll get you the money!' I don't know how. He got the money," says Box.
Box's experience isn't rare. A year late and a dollar short is the common experience with the embattled Department of Neighborhood Empowerment, which is being targeted for dismantling by Mayor Antonio Villaraigosa, purportedly solely as a budget-cutting measure.
Yet there may be more to Villaraigosa's move than merely saving money. When City Controller Wendy Greuel's audit of DONE and the neighborhood council system was released in January, it was probably the most scathing indictment of the management of a Los Angeles city department in recent history.
"The department as currently structured isn't doing the job it's supposed to be doing," Greuel said in a recent interview. Her audit language was stronger.
"The findings show that ... there has been a systematic failure of accounting and fiscal oversight of the neighborhood councils by DONE. ... [It] appears ill-equipped to manage its current responsibilities. The department does not have the proper personnel in place to provide the fiscal oversight. ..."
Greuel found that:
• DONE, the sole department responsible for auditing the 89 volunteer neighborhood councils, which each get $45,000 per year to use on a wide range of things, from junk food and postage to office equipment, never conducted a "proper" accounting of the 89 councils' records.
• DONE failed to review 364 quarterly expense reports sent in by neighborhood councils.
• DONE had a $5.6 million budget hole, a surprise to Kim.
• $160,000 was lying unnoticed in a DONE checking account, another surprise to Kim.
In recent weeks, City Councilman Paul Krekorian, chairman of the council's Committee on Education & Neighborhoods, and Dennis Zine, the committee's vice chairman, have held public meetings and invited neighborhood council members to voice their grievances against the department — ahead of a possible City Council vote to slash the department's budget.
L.A.'s $212 million deficit, and the City Council's failure for more than a year to fix the fiscal mess, earned Los Angeles a downgraded credit rating in February and set off vague talk of a possible municipal bankruptcy. Pushed by a fed-up Villaraigosa, the council reluctantly went along with his plan to eliminate 1,000 jobs and agreed to consider laying off another 3,000 of the city's 48,000 workers — although the council often threatens cuts and then backs down.
Many neighborhood council leaders among L.A.'s 89 distinct neighborhoods do not want the budget crisis to be used to punish the volunteer councils, which are considered a unique experiment in urban governance in America. That's where Box comes in, acting as one of the leaders of BudgetLA, a confederation of neighborhood councils now channeling their discontent over City Hall's fiscal failures into demands for smarter political leadership.
One of those leaders, Shawn Simons, president of South L.A.'s Empowerment Congress North Area Development Council, says, "I understand the city is in trouble financially. But I think [focusing on the neighborhood councils] is the wrong target. It should be the Department of Neighborhood Empowerment. The audit, if you really want to read it, is about DONE, not the neighborhood councils."
Although Villaraigosa's plan to dismantle DONE, slash its 38-person staff and merge it with the Community Development Department is expected to save $2 million, some grassroots leaders say they can save taxpayers far more money — by taking the administrative duties away from City Hall entirely.
Simons says the nonprofit Bridge California Community Corporation would charge the 89 neighborhood councils just $480,000 to oversee the neighborhood council system and run their local elections. If true, this would be a massive savings over the $7.6 million annual DONE budget.
How does the nonprofit idea sound to Kim, DONE's widely criticized general manager? "I don't know if the unions are going to be happy with it," he says. "We'll need to go through the city attorney. ..."
Kim insists that deeper cuts in DONE will make his poorly functioning department even worse. "Over the past two years, we've had a 40 percent cut in staff. We lost staff who did audits, process payments."
Yet almost bizarrely, Kim admits that within his department during his time as general manager, "No one reviewed any financial statements. It hasn't been set up to monitor or enforce."
The controller's audit revealed that a cowboy culture had been allowed to develop among many of the neighborhood councils. As Councilman Krekorian understates it, "There is a wide range of experience and professionalism within the neighborhood councils."
In fact, 24 of the neighborhood councils are more than a year behind in submitting to DONE their basic quarterly paperwork documenting expenditures of taxpayer money. And 17 of those are more than a year behind.
Vocal DONE critic Simons' Empowerment Congress North neighborhood council has the highest number of delinquent reports: 13 quarterly reports were late, covering $59,366 in spending.
She tells the Weekly that since the audit, she has submitted six outstanding reports, that no report from her time as president is now late, and that the former president simply could not handle the job.
Rachel Capata, the group's secretary, says, "We're getting requests for audits that predate our board. It's a nightmare now. It's really hard to straighten out."
Collectively, neighborhood councils failed to account to DONE for $880,000 of taxpayer money they spent.
If previous spending reports are any guide, a lot of that was spent on food and snacks. But the controller's audit couldn't account for about 100 "equipment items" purchased by 14 neighborhood councils, and five councils were missing 27 gadgets bought with public funds, including "computers, [language-]translation machines, wireless microphones, ham radios and cameras."
Last year, LAPD investigated six neighborhood councils for suspicious financial activity, and in October, James Harris — the president of a council dubbed the Empowerment Congress Southwest Area Neighborhood Development — was indicted by a Los Angeles County grand jury for improperly spending $152,000 of public money.
In early February, Harris, a convicted felon, pleaded not guilty to five counts, including embezzlement and falsifying receipts and neighborhood council minutes. He is the fifth neighborhood council president to face criminal charges of misusing public funds.
Kim, who is likely to lose his entire department if the mayor's merger plan goes through, deflects blame. "I believed the system was broken from the beginning." He says that's why he asked City Controller Greuel to audit his department. "Publicly, we're saying the city wasn't doing its job, and neighborhood councils were skirting the rules, too."
Kim, who left a nonprofit in 2007 to head DONE, says he's made "short-term" fixes since Greuel's findings: His department no longer gives out petty cash to neighborhood councils, and as of February 12, if every box isn't filled out correctly on fiscal reports from the councils, Kim's staff returns the forms.
Now, activists like Box are trying to determine what can be salvaged, and whether the City Council budget debacle can be turned into an opportunity to strengthen the grassroots councils. As Box wrote on the CityWatch Web site a few days ago, "It is up to the community to rise to the occasion and to deliver a vision for Los Angeles."