What Does a Million Dollar Contract Get You in Maywood?
In Maywood, a Southeast L.A. city that covers less than 2 square miles, painted crosswalks and well-maintained parks are a costly business.
A 2016 state audit found Maywood is over $15 million in debt. Nonetheless, the city awarded V & M Iron Works almost $1 million in maintenance contract work in 2017, more than double its previous year’s pay, baffling some residents.
"I don’t see them putting in that much work to be getting paid that kind of money," said Javier Garcia, a Maywood resident for over 20 years.
Questions about the lucrative V & M contract have grown more pressing in the months since the Los Angeles district attorney’s anti-corruption squad raided Maywood City Hall, the home and business of Mayor Ramon Medina and V & M on Feb. 8.
Neighboring Bell, a city with about 10,000 more people than Maywood, allotted just over $250,000 for civic and park maintenance for the 2016-2017 fiscal year.
Maywood’s financial instability forced it to contract out municipal services in 2010 after it could no longer maintain its general liability and workers’ compensation insurance. The city disbanded its police department and fired all of the city employees. Finances improved but the 2016 state audit found Maywood still had “substantial risk factors regarding the city’s financial and operational management."
At a city council meeting on Feb. 14, shortly after the district attorney’s office served its search warrants, Councilmember Eddie De La Riva protested the amount of the contract with V & M Iron Works and its owner, Felipe Velarde.
"I’m really concerned about the outrageous amounts of money that we’re paying V & M Iron Works, especially in light of what just transpired,” De La Riva said.
"I asked staff to prepare a report for me regarding the payments made to V & M over the last two years and I mean, it’s just ... wow," De La Riva said.
"For the calendar year of 2016, it looks like he (Velarde) billed us for $385,000, which doesn't sound like a lot but if we were to go back and look at previous years, I’m sure it would be higher than normal."
From 2013 to 2016, V & M had an annual contract with Maywood for $82,000. V & M Iron Works billed the city $917,000 for work done in 2017, according to city records.
"He stands to make a million dollars ... for one vendor, one contractor, for one calendar year. This is unacceptable,” De La Riva said.
"Are you done?" Mayor Medina asked as claps from the crowd filled the chamber.
“I know that we are paying a lot of money to V & M but if people from this community drive around, they can see that Maywood is clean. Maywood is organized,” Medina said.
Shouts of “No!” came from the audience.
SoCal Connected asked Velarde for comment and he directed questions to his attorney, who did not respond to requests for comment.
Mayor Medina referred questions about V & M Iron Works to an outside public relations consultant, Chuck Milagros. Milagros, who according to the city has a $4,000 monthly retainer, was unable to provide a response to questions about V & M Iron Works’ contract.
Shortly after V & M Iron Works was awarded a contract with Maywood in 2013, the state began investigating allegations that Velarde had abandoned a private construction project he had taken money to complete. The accusation claimed Veronica Gomez, a recent widow, paid Velarde $130,000 to remodel her Orange, California, home, which had a roof leak and plumbing issues.
State investigators determined that Velarde abandoned the job, leaving Gomez and her two children living in an RV and facing a cost of $108,905 in repairs to make their home habitable. In 2015, Velarde’s contractor license was ordered revoked but that revocation was stayed and Velarde was put on probation. He was ordered to pay Gomez $36,000.
SoCal Connected requested public records from Maywood to learn more about the work V & M’s employees were doing for the city. Maywood officials said they could not turn over employee timesheets because they had been seized by the district attorney’s office. Maywood released a month’s worth of employee invoices for December 2017 showing scant details about the work the employees had performed, with only the words "park" or "city hall" written. City officials were unable to provide further details on what these employees were doing.
SoCal Connected inspected work known to have been done by V & M in December. Employees painted curbs and crosswalks and cut cement at 52nd Street and Cudahy Avenue, and they spent a week painting parking spaces and curbs on Fruitland Avenue, a street that is less than a half-mile long. When SoCal Connected inspected these spaces, some of the parking lines had been painted over.
Interim City Manager David Mango confirmed, "There were certain spaces that were painted incorrectly and later changed and/or eliminated."
V & M also had issues with timely rental payments to the city of Maywood. The 2016 state auditor’s report found that V & M Iron Works has leased property from the city but had only made one of its lease payments on time in more than three years. Despite this, city officials never charged V & M for the 10 percent late fee of $250. The state auditor says the city thereby lost over $10,000.
Ofeilia Mancera, Maywood’s director of finance, confirmed that the city has never imposed a late fee on V & M, but claimed the business has been current on all rental payments.
The auditor’s report also found that V & M Iron Works was not carrying the mandated insurance policy level. Although contractors are required to have insurance policies that cover vehicles “with a combined single claim limit of $1 million" V & M Iron Work’s policy listed vehicles with individual coverage of less than $500,000.
On Wednesday, Maywood City Council planned to obtain authorization to request bids for a new street maintenance contractor. It is unclear whether V & M Iron Works will bid for the contract. The item previously appeared on the agenda on April 11 but was pulled by Mayor Medina.
De La Riva questioned the value of V & M’s work for the city.
"I saw some of the employees painting the wrought iron gate of the private parking lot at City Hall. No need to do that. They powerwashed City Hall. Again, absolutely no need for that. They hang street banners," he said, shrugging.
"V & M also built the speed bumps all over the city," he said. "They last six months and they were already cracked and broken."