The two-minute video titled "Save Miranda" was produced by Venice-based Zoochosis.com and pokes fun at police profiling. It shows five men playing a hazing-style joke on a driver, and then later firing weapons into the air.
The department claims no sworn officers participated. But so far, three city employees are under investigation and could face disciplinary action.
The video has gotten more than a million hits since it was posted in June.
Assistant City Manager Tom Bachman says the city asked the production company to take it off the Internet and they did, but then put it back.
The video was discussed at Tuesday's City Council meeting.
"The City Council takes this action very seriously. I want to emphasize the fact that the use and misuse of taxpayers' property and resources is not going to be overlooked by the City Council and the city of West Covina," said City Attorney Arnold Alvarez-Glasman.
Rick Steadman, who appears in the spoof, said the weapons in the video were not real guns.
"They were prop guns," he said. "The gunshots were added post-production."
As for the controversy, Steadman said he understands if city officials are talking about use of resources, but he doesn't believe the council is qualified to judge comedy.
"The film is just funny. It's not a statement about the actual behavior of police officers," Steadman said.
The city is still trying to determine how the patrol cars were made available to the production company, and if those city employees were being paid on city time.
The issue will be turned over to the district attorney once the city finishes its probe, which is expected to take a week.
The Associated Press contributed to this report.
