Larry Kosmont, the well-known local economic development consultant, has been named interim city manager of Montebello to help solve severe financial problems there.
The Montebello City Council on May 11 voted 4-1 to approve a six-month, $150,000 contract with Kosmont’s consulting company. Kosmont and another consultant with his firm, David Biggs, will jointly administer the city, with Kosmont focusing on a financial workout plan and Biggs in charge of day-to-day operations.
Kosmont and Biggs, both former city managers, replaced Peter Cosentini, the former interim city administrator who resigned last month amid a deepening financial crisis in the San Gabriel Valley city.
Moody’s Investor Service downgraded Montebello’s bonds to junk status last week after revelations that the city’s general fund faces a budget deficit of $1.2 million and owes $17 million to city’s redevelopment agency.
Last month, state Controller John Chiang announced his office would conduct an audit of Montebello’s books after city officials had announced they had found two secret bank accounts containing hundreds of thousands of dollars in city money.
Los Angeles County District Attorney Steve Cooley has launched an investigation into how the money was deposited in the accounts.
Also last month, the federal Department of Housing and Urban Development asked the city to return $1.3 million in grant money the agency alleges was improperly spent.
“The city has fallen prey to a series of decisions that didn’t work out financially,” Kosmont said late last week. “What’s needed is a clear and precise strategy to go back to the financial markets.”
Kosmont, 59, is best known in business circles as the creator of the annual Cost of Doing Business Survey, which compares the cost of city taxes, utilities and other business costs in more than 400 cities in all 50 states. His firm, Kosmont Cos., provides economic development and real estate consulting services to corporate and municipal clients.
Montebello hired Kosmont Cos. earlier this year to help with transactions involving two properties in the city that have been the subject of litigation. During that process, Kosmont said he became aware of some of the city’s financial problems, which were complicating the financial transactions for the properties.
“That’s when I proposed to the city that our firm could provide some stewardship so that the city could go back to the markets,” he said.
Kosmont said that having a consultant take over municipal operations is rare, but not unprecedented. After Orange County filed for bankruptcy protection in late 1994, the Board of Supervisors hired former savings and loan executive William Popejoy as county chief executive. Popejoy served eight months, helping craft a recovery plan for the county.
