‘Missing’ Montebello Funds Went To Restaurant Developer (Updated)

By Elizabeth Hsing-Huei Chou, EGP Staff Writer

City officials say nearly $1 million thought to be missing from an off-the-book bank account went to a developer to build a restaurant and office building at the Montebello Town Square shopping center. (Photo by Jessica Chou)

Whatever happened to the “missing” $1 million in the city of Montebello?

City officials are now saying it was used to entice a developer to build what is now an Applebee’s restaurant at Montebello Town Square.

The use of the funds was approved by the city’s redevelopment agency, according to a 70-page press release sent out by the city last week.

The $1 million was given as a forgivable loan, or “agency grant,” to developer Henry Attina, also known as Hank Attina, to build an “upscale restaurant” similar to “Hard Rock Cafe or Planet Hollywood with a Latin emphasis.”

Attina was expected to build a restaurant on 10,000 square feet of a 40,000 square foot property he owned in the Montebello Town Square. Another 7,000 square feet would be developed into office space.

A 1999 staff report indicated that the hope was to fill an as yet “untapped market” for an “entertainment venue and restaurant” as well as to “satisfy the long-time wishes of the Montebello community.”

The agreement with Attina’s company Prime Cuts, Inc. was approved in 1999 by redevelopment agency members Kathy Salazar, William Molinari, Mary Anne Saucedo, Edward Vasquez and Art Payan, who were also the city council members.

Molinari still sits on the city council and the redevelopment agency, while the city attorney who handled the agreement, Arnold Alvarez-Glasman, is also currently retained by the city and the redevelopment agency.

The redevelopment agency’s legal budget was recently upped by $400,000, from $60,000, because of mounting legal costs from lawsuits against the redevelopment agency, which Alvarez-Glasman represents.

Last week’s release came after officials discovered a Union Bank statement that was not on the general ledger.

It was the second bank account with seemingly unknown origins. In January, the city was notified of a dormant account with Banco Popular that officials later determined was part of a loan program made available to businesses around town that needed to make improvements to their buildings.

The Union Bank account however remained a mystery as attention from the media and even the district attorney’s office – which received a complaint amid the rush for answers – mounted over questions of whether someone absconded with $1 million in city funds.

All that anyone knew at the time was that originally there was about $900,000 in the account, and currently a little more than $5,000 remains.

The account was so old that no one in the city was authorized to view the details of the account, and a special meeting had to be held by the city council to assign authority to current city officials.

Officials have since officially stated that the Union Bank account may have been left off of the general ledger because there was a mistaken assumption the account was closed, although there were apparently bank statements in the city’s finance department to indicate otherwise.

The city has found some documentation, nearly 70 pages worth, to explain the whereabouts of the $1 million that was taken out of the account.

Those documents indicate the city invested a little over $900,000 into a Union Bank account in November 1999. A year later, the city cashed out a larger sum of $1,007,307.17.

In October 2000, the bulk of the money was wired in two parts to Montebello Hillside, LLC, owned by Attina.

Interim City Administrator Peter Cosentini said they did some digging and found that Montebello Hillside, LLC was linked to an agreement with Prime Cuts, Inc. also owned by Attina, that promised to bring an upscale dining establishment to the city.

The developer was given $1 million from the redevelopment agency to help build the restaurant and an office building where the restaurant was to be located.

According to Molinari, the loan would be forgiven only if Attina satisfied several requirements, including making $2 million in improvements to a 17,000 square foot property in the Montebello Town Square, and bringing in a minimum amount of sales and property tax revenue to the city every year.

Attina “pledged” the restaurant and the office space property to the city as collateral on the loan, according to Molinari, in case he failed to deliver his end of the bargain – which nearly happened.

The original proposal had been to build a restaurant called Noa Noa, a start-up chain backed by Latin recording artist Juan Gabriel. News reports at the time said the deal fell through after disagreements and a court battle ensued between the singer and Attina.

While the city’s release does not explain or document how an “upscale restaurant” project became an Applebee’s, Molinari told EGP that after the original project “fizzled out,” the city went looking for another restaurant.

In the end, the city had Tony Romas and Applebee’s bidding to locate on Attina’s property. The subsidy that would have gone to the Noa Noa project was used instead for the Applebee’s, which won the bid.

According to Planning Director Michael Huntley, the redevelopment agency also contributed money to help Applebee’s with “tenant improvements.”

Molinari said the city council decided to give the $1 million incentive to a developer because restaurant chains were “reluctant” to locate in Montebello because of perceptions about its minority demographic.

He said 21 different national restaurant chains had already rejected the city, and another high-end restaurant project was replaced with three fast food restaurants.

Molinari says Montebello’s Applebee’s has since proven itself by becoming the top location in the region, and by ranking in the top ten in the country.

With so much attention now on Montebello, some city officials, including Molinari, have been eager to show that rather than a “backroom deal,” the $1 million “mystery” account is linked to something more prosaic and “above board,” if not positive for
the community.

But if the whispered conversations by long-time observers of city politics and comments on newspaper message boards are any indication, the new information touches off another set of questions, especially regarding the involvement of Attina, a polarizing figure in Montebello due to his closeness to past and current city officials.

Attina, who has been less visible in recent years, was a long-time businessman and resident of Montebello who ran several restaurants in the city. He is both credited with and distrusted for having a hand in many of the city’s major commercial and senior housing developments.

Molinari defended Attina, saying he has been a “catalyst” for development in the city, and does not see anything “negative” with Attina’s involvement in the Applebee’s project or other projects, and neither does he feel his involvement was ever excessive.
The $1 million given to Attina to develop the project “was a large commitment upfront, but it paid off,” says Molinari, who adds, “If you want the reward you have to be willing to risk something.”

While Molinari believes the $1 million was a good investment, he says people have the right to disagree: “That’s the democratic system.”

Yan Tang, a professor at the USC School of Policy, Planning, and Development, says it is fairly routine for municipal governments, especially ones that are trying to draw reluctant national retailers into their city, to provide incentives to developers, but “such a huge amount of money” as $1 million warrants skepticism.

“It is the right of the citizen to ask officials to justify it,” Tang says.

Meanwhile Montebello city officials who are dealing with multiple entrenched financial problems in the city say they have not yet closed the case on the Union Bank account.

Cosentini said last Thursday he has found “nothing illegal, to date” in the documents they have dug up so far, but there were some “outstanding questions” such as where the original $900,000 came from and whether everything is “okay with the deal” to bring a restaurant into Montebello.

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March 17, 2011  Copyright © 2012 Eastern Group Publications, Inc.

Comments

One Response to “‘Missing’ Montebello Funds Went To Restaurant Developer (Updated)”

  1. Dean on March 19th, 2011 6:03 pm

    How can National chains be reluctant to locate in Montebello when we have BJ’s,Marie Callenders.Polly’s and Starbucks to name a few. I would like to see an upscale market here like Henry’s Sprouts or Whole Foods, This would benefit Montebello more than Applebies.

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