December 13, 2000

By Elizabeth Lee
Staff Writer

PASADENA -- The city has discovered that about $2 million in 1992 bond money intended for the Arroyo Seco was instead spent on other purposes, including renovations at the Rose Bowl.

The news, announced last week as residents were already scrutinizing the city's handling of arroyo funds, has angered parks advocates and Mayor Bill Bogaard.

The mayor said the revelation has "embarrassed" the city and he called for an audit to explain the discrepancy.

"It seems to me, the financial reporting provided in recent months on the Rose Bowl ... is brought into substantial discrediting by the events of this afternoon," Bogaard said after the announcement at the council's Business Enterprise Committee meeting.

"We're at the point ... (Councilman Steve) Madison talked about months ago," Bogaard said. "We need an independent review."

But he and other members of the BEC decided to postpone a decision on an audit until a Feb. 7 meeting, when city staff will report on why the money was spent elsewhere.

Given that the only annual revenue earmarked for the arroyo is developer fees - which have averaged about $5,500 a year - arroyo advocates wonder why the city sent most of the 1992 money to the Rose Bowl.

"To have it spent on something in the stadium seems to me to be a perfect example of how the park itself is given a lower priority," said Pat Shanks, a board member of the West Pasadena Residents Association.

"I think it's disappointing that the city does not have better control over its finances, especially with regard to those that are managed by the (Rose Bowl Operating Company)," she said, referring to the agency that accounted for the money. "There certainly needs to be either a very thorough internal review or an independent audit of the finances of the RBOC."

The Arroyo Seco is Pasadena's largest park, a river canyon that stretches from the foothills to the Los Angeles River channel.

The controversy over the arroyo funds has its origins in a 1986 contract on the city-owned Brookside Golf Course, which is governed by the RBOC. Course operator American Golf agreed to donate 10 percent of its greens fees every year for capital projects in the arroyo.

In 1992, hoping to leverage that revenue, the city issued Certificates of Participation that would generate $2.7 million for the arroyo. COPs are a form of municipal financing similar to a mortgage on public property.

The $2.7 million, out of total proceeds of $28 million, were intended for the arroyo "to help fund projects identified by the Lower Arroyo Seco Master Plan, or other capital projects in the Arroyo Seco," according to a 1992 staff report.

But documents shown to bond holders at the time were more specific, mentioning only the Lower Arroyo Seco and the Fannie Morrison buildings as beneficiaries, Goldstone said.

The city planned on paying off the 1992 COPs with the annual 10 percent set-aside from Brookside Golf Course, but most of that $2.7 million wasn't spent as intended.

City Finance Director Jay Goldstone said the city can legally decide to redirect COP funding after they are issued.

"It was probably an administrative decision, right or wrong," he told the BEC.

Such projects as clearing trails, repairing stone walls and sprucing up the derelict former horticultural buildings given to the city by Fannie Morrison were never done.

About $1.6 million was spent to make the Rose Bowl wheelchair accessible and on other stadium improvements in an expenditure approved by the council in 1995.

Also, more than $350,000 was spent on repairing the restrooms at Brookside Park and landscaping at Jackie Robinson field. According to Goldstone only about $426,000 was spent on the Lower Arroyo Seco and the Fannie Morrison buildings.

About $847,000 is left from the 1992 COP funds, including interest.

As officials sort through the arroyo funding, it's up to the city to decide whether it wants to retroactively charge all of the debt service from 1993 to 2000 to the 10 percent set-aside - or to charge only part of the debt service to that account.

Rose Bowl General Manager Darryl Dunn said he would wait for the staff's report in February to make a recommendation.