It just might be easier to build a courthouse in Bell.
As six former city leaders stand trial on corruption charges, the small Los Angeles County city is facing a mountain of legal challenges, any one of which could bankrupt the town. And federal investigators are continuing probes into the city's once-leaky finances.
Bell may have fresh leadership and a born-again attitude, but the city is a long way from being out of the woods.
Full coverage: Crisis in Bell
Former city leaders are suing the city. Bell is suing the former leaders. The city is suing its former lawyers. A European bank is suing Bell.
City Manager Doug Willmore, the first permanent chief executive in town since Robert Rizzo was fired after his extraordinary salary was revealed, said Bell is now spending $1.6 million a year on legal bills, four times the average for a city its size.
"The time I spend on litigation is quickly approaching half, which is just enormous," he said. "And it's basically all scandal-related."
The law firm that has served as Bell's city attorney for the last 20 months said that it has represented the city in more lawsuits and hearings in that time than in all 34 years it has worked for Lawndale, a South Bay city that's only slightly smaller than Bell.
"The volume of litigation for a city the size of Bell is unprecedented," said Anthony Taylor, an attorney for the city.
Besides the lawsuits, the U.S. Securities and Exchange Commission and the Internal Revenue Service are continuing to investigate bond sales under former City Manager Robert Rizzo, including $50 million for a sports complex in the park-starved city.
"As I looked at all the data, I think the bonds were a big part of the scheme to get them [city officials] more and more money," Willmore said. "Why else would they continue to borrow all that money and not spend it on the projects they were supposed to spend it on?"
Willmore said potential penalties could include fines and lead to millions of dollars in damages.
Bell's biggest concern is a lawsuit filed by Dexia Credit Local, part of a European banking group, over the city's default on $35 million in bonds. The case involves 25 acres of undeveloped land near the 710 Freeway that Bell bought from the federal government with plans to lease it to a railroad.
Dexia bought all the lease revenue bonds the city issued to pay for the deal, which came to more than twice the city's annual budget.
The deal went bad when an environmental group sued, arguing the city had failed to conduct the required environmental review. The judge agreed. Unable to lease the property — now worth far less than the bonds — Bell had no income to pay back Dexia.
If the judge rules for Dexia, Willmore said Bell would have no choice but to declare bankruptcy, falling in line behind Stockton and San Bernardino as cities that went bust.
Bell contends the land deal was illegal, because, among other reasons, it was never put before voters. "The transaction was outrageous, and we think it clearly violated California law," Willmore said.
In a related lawsuit, Bell is suing Nixon Peabody, one of the largest law firms in the country, for its role as the city's bond counsel in the Dexia and other bond deals. The suit alleges fraud, malpractice and that the firm overcharged the city.
Bell has another malpractice suit, this one against former City Atty. Edward Lee and his former firm, Best, Best & Krieger, a well-known municipal law group. A memo from current City Atty. David Aleshire called the case "asleep at the switch claims," contending Lee gave the city poor advice and allowed much of the corruption to take place.
The suit also alleges that Lee and his firm failed to give Bell proper advice on the Dexia deal.
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