Originally published 12 July 2000
in The News-Enterprise
Described as an "example of what can go wrong," the State
Joint Legislative Audit Committee reported on the two decades' debacle involving
the City of Hawaiian Gardens' Redevelopment Agency and the casino being built
on Carson Street.
Assemblymember
Scott Wildman chaired the joint committee that researched the history of
how Dr. Irving Moskowitz and his Cerritos Gardens General Hospital Company
allegedly bilked the agency of millions of dollars of taxpayer money to get
a gambling establishment built in the city.
THE BEGINNINGS After its
incorporation in 1964, the city council formed a Community Redevelopment
Agency in 1969 that covered the entire nine-tenths of a square mile city.
The
agency, in early 1982, began its redevelopment efforts with the 23-acre site
at Pioneer Boulevard and Carson Street. It contained a few businesses and
vacant land owned by CGG Hospital Company and Moskowitz. While several of
the business owners were agreeable to working with the agency, Moskowitz
was not.
When the agency tried to acquire his land through eminent
domain, he filed a lawsuit, ultimately persuading the agency to withdraw
its attempts, allowing him to develop his parcels. The first agreement between
the two parties in 1982 was thwarted because Moskowitz failed to produce
any drawings or plans. According to the JLAC report, "Moskowitz's intentions
to build a gambling operation . . . which was illegal at the time, became
evident."
It took almost three years before Moskowitz submitted a
set of site plans when he asked to get an extension to negotiate a disposition
and development agreement.
DELAYS, LAWSUITS In January 1987, six months
after another attempt to condemn Moskowitz's property, the agency filed an
eminent domain action to acquire Moskowitz's property.
Moskowitz sued
the city and agency for racketeering, conspiracy, fraud, malicious intent
and violation of his constitutional and civic rights. According to the JLAC
report, Moskowitz then claimed "no public assistance is required to improve
this property." Yet, earlier, he claimed "the only way this property can
be developed properly is by the city making a contribution to the developer."
PLANS,
AGREEMENT In August 1988, the property owner proposed a development that
included a restaurant, hotel, entertainment center, three mixed retail areas,
two anchor retail areas, a food specialty section, a corner retail section,
child care, a bingo hall, an open-air market area and senior housing. Yet
nothing began on the site through 1989, when Moskowitz bought another parcel.
The agency again faced the situation of having a "stubborn" property owner
acquiring more of the site and not having enough money of its own to fight
any lawsuits or to start the project.
Consequently, the agency agreed
to sell the property it owned at the site to Moskowitz. In August 1992, Moskowitz
asked the agency to acquire the remaining acreage at the site on his behalf,
claiming he needed all the property for the proposed development, and that
the remaining property owners refused to sell. The agency and property owner
began to negotiate a disposition and development agreement, but when the
agency's version of the DDA reversed much of the responsibility and risk
back to Moskowitz, he promptly pulled out of the agreement, leaving the agency
dealing with only three property owners - the very ones Moskowitz wanted
to buy out.
In March 1993, he apparently threatened the agency with
no development unless the agency acquired the three parcels. He allegedly
pushed the agency to adopt a revised DDA, under which the agency would be
responsible for 50 percent of the acquisition and relocation costs and all
of the infrastructure improvements.
Additionally, Moskowitz did not
deliver his version of the DDA until right before the agency's meeting, then
demanded it approve it the following day. Such action, according to the report,
would violate state law requiring public hearings and notification.
The
agency further violated the law when it held a special, closed meeting in
May 1993 to consider the DDA. However, according to the JLAC report, the
agency members were given Moskowitz's version of the DDA.
STATE CODE
VIOLATIONS The members were advised that they could not hold a closed meeting
on a contract with a developer, and they agreed to only discuss condemnation
during the session, without any staff present. (According to the report,
a mandated audio recording "machine appears to have been stopped.") In open
session, the members approved Moskowitz's version of the DDA, without debate
or taking public comment.
In 1994, Moskowitz asked for an amendment
to the DDA that would eliminate his obligation to pay his share of relocation
costs for the businesses now leaving the site and to permit his removing
tenants whenever he chose. Additionally, the amendment eliminated any liability
by Moskowitz for delays in developing the site caused by property owners'
fights against his acquiring their land.
ATTORNEY PROBLEMS When Lakewood
Suzuki and Downen's Garden Center sued the agency, Moskowitz' attorney, Beryl
Weiner, mysteriously became counsel for the agency in the cases. According
to the JLAC report, neither party has ever produced a retainer agreement
between the agency and Weiner. Such dual representation constitutes a violation
of state bar rules, the report concluded.
During this, Moskowitz asked
for a second DDA amendment in June 1995 that extended the deadline for him
to present a plan; added five more parcels using the agency's condemnation
power; and changed the plan from a food and drug establishment to a commercial
one.
At a June 1995 agency meeting, the JLAC contends Weiner made
false statements to the board about Moskowitz's need to obtain more property
and how difficult it was for him to attract businesses to the site. The amendment
would expose the agency to more lawsuits, according to Graham Ritchie, the
agency's counselor, and again would relieve Moskowitz of any financial burden
to obtain property. The agency approved the amendment in August 1995.
GAMBLING
CAMPAIGN According to the report, Moskowitz used fear tactics, as well as
city staff, to intimidate 57 percent of the 6,000 voters to approve a city
ordinance authorizing gambling within city limits at the November 1995 election.
A citizen's group, Committee Against Card Club Associations, tried to combat
the well-financed campaign, and Moskowitz filed a lawsuit against the nonprofit
group in July 1996, which it settled because the group had no funds to defend
itself.
It was during this year, according to the JLAC, that Moskowitz
began to contribute around $200,000 a month to the city, through two nonprofit
organizations, the Hawaiian Gardens Police and Public Safety and the Hawaiian
Gardens Education foundations, both of which were "wholly dependent on the
Irving I. Moskowitz Foundation."
The arrangement was formalized with
a March 1999 agreement that gave the card club a 15-percent "offset" of the
monthly license fee in excess of $200,000 until the club generates $4 million
in revenues per month. Once it generates that minimum amount, according to
the agreement, the club would receive a 17.5-percent offset on the monthly
license $200,000 fee.
FINDINGS The JLAC concluded:
-- Through negligence and malfeasance, the agency and city violated state law;
-- Moskowitz has obtained redevelopment funds to subsidize his gaming establishment, in direct violation of redevelopment law;
-- The agency has assisted a private landowner to purchase and assemble land for the gaming operation;
-- The agency has eliminated viable commercial entities on the site while helping Moskowitz; and
-- The project violates state laws.
RECOMMENDATIONS The JLAC recommended the following actions, among others:
-- The redeveloper (Moskowitz) should reimburse all subsidies and fees to the agency;
-- The state attorney general should help the agency recover public monies that subsidized the development;
-- Local, state and federal law enforcement agencies should investigate for criminal activities in relation to the project; and
-- The legislature should create a body to guide local redevelopment agencies with critical issues.
Further reports exploring all sides of these issues will appear in the weeks to come.
Copyright 2000, The News-Enterprise. For education and discussion only. Not for commerical use.
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