L.A. could pull money away from fund tied to beleaguered Councilman Jose Huizar

Los Angeles lawmakers could yank money away from a fund that was controlled by the office of Councilman Jose Huizar, who has been accused by federal prosecutors of heading a pay-to-play scheme fueled by bribes.

At a meeting Tuesday, a council committee backed the move by Mayor Eric Garcetti, recommending that money anticipated under a development deal be reallocated to other city funds. The decision now heads to the full council for approval.

Huizar, who has been suspended by the council, was arrested last month and charged with racketeering in an ongoing corruption case. His attorneys say he “intends to respond to the government’s allegations in court.”

Amid the federal probe, Garcetti sought to roll back a city decision tied to Huizar, vetoing the development agreement for a Fashion District project called City Market of Los Angeles. Under such agreements, developers agree to provide community benefits in exchange for legal protections for their projects.

City Market of Los Angeles agreed to provide up to $9.8 million to a trust fund controlled by Huizar’s office — and could be required to pay more if it fails to build a specific number of units that are affordable to people with moderate incomes. The money would go toward street beautification, transportation or affordable housing in the district, under the agreement.

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Garcetti argued that the money should instead go to funds earmarked for affordable housing, homeless health services, public transit and street improvements, as the City Planning Commission had earlier recommended. A council committee headed by Huizar amended the proposed deal two years ago to direct money toward his district fund.

The mayor did not mention the corruption probe in his explanation for his veto, which took place before Huizar was arrested. But the federal investigation, long known to be underway, has spurred concern about decisions tied to Huizar. Last month, several council members called for reassessing approvals of projects mentioned in the criminal case.

Federal prosecutors have not named the real estate projects involved in the corruption probe, although several others have been identified by The Times and other outlets based on key details included in prosecutors’ filings. Investigators have not provided information to indicate that City Market of Los Angeles is accused of any wrongdoing in the case.

Ahead of Tuesday’s vote, a few callers urged the committee to go farther than reallocating the money and reject the City Market of Los Angeles project entirely, citing the allegations against Huizar.

“You guys need to send a very strong message today,” downtown resident Peter Clune said.

Members of the council committee agreed to back the veto and recommended changes without debate or comment.

Eduardo Soriano-Hewitt, chief of staff of the office that has been represented by Huizar, said in a statement that the veto “does not change or undermine the spirit and intention of the public benefits that were negotiated for this project.”

“We support the action that was taken this afternoon,” Soriano-Hewitt said in a statement, adding that it “will ensure that there will be targeted funding for homeless services and programs, the expansion of affordable housing opportunities and public works infrastructure improvements.” Residents of the council district “will benefit from this decision.”

City Market of Los Angeles is not fighting the change either: In a letter to council members, a consultant representing the company said it supports allocating the funds “to uses that the mayor and the council determine to be the most important and beneficial” and urged city officials to swiftly approve a revised agreement.

Its planned project would redevelop a 10-acre site in the Fashion District with more than 900 units of housing, over 200 hotel rooms, office space, shops and restaurants.