Photo by John Schreiber.
Photo by John Schreiber.

Poor timing of bond issues for water clean-up projects led the city to pay about $54 million more in interest than necessary, Los Angeles Controller Ron Galperin said Wednesday.

The finding came from an audit Galperin performed on the city’s issuance of bonds under Proposition O, which finances projects such as the installation of screens in stormwater catch basins to prevent trash from flowing into the ocean, the rehabilitation of Echo Park Lake and the creation of a wetlands park in South Los Angeles.

Galperin said his audit found the city was issuing bonds well before bills needed to be paid. That meant large amounts of money borrowed on interest was sitting in investment accounts that had return rates that were 2 to 2.5 percent lower than the interest the city was paying to bond holders.

“No savvy investor would borrow money and then leave it sitting dormant in a bank account,” Galperin said. “And yet, that’s exactly what the city has been doing.”

–City News Service

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