ValleyVote Update for 01-12-01 |
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Here is the continuing saga of the CRA. The movement of funds from CRA controlled property taxes in the Valley to LA is an ongoing question in the amount of revenue which the valley provides to Los Angeles. This is how it was analyzed By Ray Deaton of the LA City Council.
"The geographic region for each redevelopment area was identified. Revenues for each project area were then obtained from the Report on Agreed-Upon Procedures Related to Five Years Revenue Projection and Related Information and summed by geographic region."
What ever that means. The report assigns $134,374,000 or 94% of the citywide CRA revenue to LA and 4% to the Valley. See the report at
http://www.ValleyVote.org/Lacity/0012rev5.htm#CRA
Finances: Redevelopment agency ignored its own valuations and failed to tell City Council about the extra cost, the report says.
The full city report is at
http://www.lacity.org/CTR/ParkingLot.pdf
It is a scanned image only and can not be converted into text (HTML) it is non complaint with AAD standards.
By PATRICK MCGREEVY, Times Staff Writer
The Los Angeles redevelopment agency bought seven properties for a combined $1.57 million more than the agency's own appraisals said they were worth, according to an audit Monday that found "inadequate control" over agency finances. The audit, commissioned by City Controller Rick Tuttle, found that the Community Redevelopment Agency failed to disclose the extra cost to the City Council. In addition, it said the CRA often failed to use competitive bidding in awarding contracts from 1996 through 1999.
Tuttle asked the district attorney to investigate, citing the audit findings and a private investigator's report that "suggests the possibility of questionable or unlawful activity" within the agency. "We have serious concerns about the management culture there, and about how taxpayer money is being used and accounted for," Tuttle said. "This is not someone's private piggy bank. This is taxpayer money." Tuttle said the audit did not find evidence that any specific CRA employee benefited financially from agency activities.
CRA Administrator Jerry Scharlin, who took over the agency 15 months ago, asked for the audit this summer after inquiries from The Times. Scharlin sent a directive to agency staff Monday implementing 10 short-term changes in policy recommended by the auditor. They include a requirement that the city appraisal manager be in charge of all assessments, that two appraisals be done on each land purchase and that the results be disclosed to the City Council and CRA board.
The audit criticized the agency's use of private consultants to relocate residents and businesses displaced by redevelopment. It said two firms got agency business--more than $550,000 worth--without competitive bids or written justification. "The report by the controller indicates these are serious breakdowns," Scharlin said. "This agency does need to focus on strengthening policies and internal controls."
Scharlin had been criticized by some City Hall officials for paying a private detective more than $20,000 to look into all the topics covered in the Tuttle audit. Scharlin said the private investigator's report was used by the Tuttle auditors.
The district attorney's Special Investigations Division, which handles public corruption cases, will probably be assigned to examine the reports sent over by Tuttle, said Sandi Gibbons, a spokeswoman for the prosecutors. "We will review it to determine if there will be a [criminal] investigation," Gibbons said. [And in the three months after this audit was released nothing has happened]
Councilman Joel Wachs, a candidate for mayor, said a county grand jury should investigate all the transactions. Wachs said he felt "betrayed" that agency officials had not disclosed that the purchase prices they asked the council to approve were higher than appraised values. "You have professional people that you place your trust in," Wachs said. "They have a duty to be honest with us."
The Times disclosed in September that the agency [CRA] paid a politically influential landowner $1.46 million for a Hollywood parking lot on Argyle Street that a city appraiser said was worth $795,000. The purchase was made as part of a plan to build a parking garage to serve Capitol Records. Steve Ullman, whose investment firm sold the Argyle Street lot to the agency, said in an interview that he did it reluctantly at the request of officials of the mayor's office because he was told it would help keep Capitol Records in Hollywood. He said the deal was not unfair to the city. Ullman, whose family has made many political contributions to city officials, said the initial CRA appraisal was inaccurately low, and he believes he could have sold the parcel to others for what the CRA paid. This year, the council approved the sale of the lot to Capitol Records for $1.46 million.
That purchase by the city was the center of the Tuttle audit, conducted by a private auditing firm. For all seven properties combined, the agency paid a total of $1,572,315 more than city appraisers said they were worth, according to the report by the auditors. Two of the purchases--both for lots on Yucca Street--were part of the effort to keep Capitol Records in Hollywood.
In one case, the agency appraised the parcel at 6270 Yucca St., identified in the audit as owned by Soo C. Wong and H. Tung, at $69,000, but the agency paid more than twice as much, $145,000. In the other, for a parcel at 6272 Yucca St. owned by Stanley and Joyce Black, the agency appraisal said the lot was worth $385,000 but the agency paid $475,00, or $90,000 in excess of the appraised value. The agency paid more than twice the $204,000 appraised value of a property at 252 S. San Pedro St. in Little Tokyo, according to the audit. In two other transactions covered in the audit, agency officials added payments of $275,000 for "goodwill" to the appraised value--an effort to compensate intangible losses--boosting the seller's price.
In each case, auditors said appraisal amounts were not disclosed to the CRA board and City Council, which approve the purchases. "This lack of disclosure resulted in the misrepresentation by CRA staff of property acquisition information to the CRA board and City Council," the audit concluded. "We believe if the appraisal amounts had been disclosed, certain property transactions may not have been approved or further negotiations might have taken place resulting in a potentially lower price."
The audit said the CRA's former relocation department manager was allowed to select contractors, authorize work, approve invoices and even pick up the checks from the accounts payable department for contractors. One seller, Stanley Black, a prominent Beverly Hills real estate investor, said he thought the CRA got a good deal for the building. "They paid way less than it was worth," Black said.
Questions of Worth The following properties were bought by the Los Angeles redevelopment agency for more than their appraised value.
| Location | Appraised Value | Price Paid |
| 6270 Yucca St. | $69,000 | $145,000 |
| . 6272 Yucca St. | $385,000 | $475,000 |
| 1751 Argyle St. | $795,000 | $1,467,315 |
| 252 S. San Pedro St. | $204,000 | $430,000 |
| Block 29, Wilmington | $987,000 | $1,220,238 |
Source: City of Los Angeles
* The Nov. 9 "Capitol Records Deal OKd Despite Anger About Land Price" is normal operating procedure for the Community Redevelopment Agency.
Several years ago, the CRA terminated the official Hollywood Project Area Committee [PAC]. It was comprised of community stakeholders who volunteered their time to advise the CRA in the hope of improving their neighborhoods. But instead of rubber-stamping CRA actions, they were rightfully critical.
Hence there was no PAC oversight to the Capitol Records deal. Unfortunately, history is repeating itself in North Hollywood. The North Hollywood PAC has consistently been critical of the CRA's follies in North Hollywood. Now the CRA is trying to silence that PAC by not reauthorizing it. Is that what the Neighborhood Councils have to look forward to?
VICTOR N. VIERECK Chairman, North Hollywood Project Area Committee
By PATRICK MCGREEVY, Times Staff Writer
City Controller Rick Tuttle suggested that the Los Angeles City Council delay action on a deal to keep Capitol Records in Hollywood, disclosing Friday that his office has launched an audit of the controversial transaction. [His request was ignored] The Times reported that, as part of an early version of the deal, the Community Redevelopment Agency bought a parking lot for nearly twice what an agency appraisal said it was worth. A second appraisal that justified the $1.5 million price was done after the agency board approved the purchase in 1998.
The deal has since been restructured so Capitol will buy the parking lot from the CRA for the full price the agency paid, although the agency will then provide $490,000 of the money toward renovation of an office building for Capitol.
Tuttle disclosed Friday that the Capitol Records deal is one issue being examined by private auditors as part of a City Controller audit of financial controls in the redevelopment agency. "In light of the controversy over the Capitol Records project, I have asked [auditors] to issue an additional report stating the facts of the Capitol Records project as they find them," Tuttle said in a letter to the City Council.
He said the audit report should be completed by the end of October. "Should council members feel that additional independent information on the facts surrounding this transaction would be helpful, they may wish to hold the Capitol matter until then," Tuttle wrote.
CRA officials voiced concerns about any further delays in a project that is scheduled for the City Council next week. "This project really does need to move forward," said Jeff Skorneck, project manager for the CRA. "Any improprieties that existed, if any existed, were from two or three years ago."
Skorneck said he was interviewed extensively about the project by auditors Monday. CRA administrator Jerry Scharlin has said that additional controls have been put in place to make sure there is additional oversight in the valuation and purchase of properties.
City Councilwoman Jackie Goldberg, whose district
includes Hollywood, earlier this week urged approval of the latest version of
the deal, noting that the city's investment of $4 million will reap private
investment of more than $29 million.
Goldberg said Friday that the original appraisal,
which set the value of the Argyle Avenue parking lot at $795,000, was
unrealistic, given the potential valuable uses for the land.
Councilman Nick Pacheco, who heads the council's committee on redevelopment issues, has also urged council approval of the new deal. He downplayed the controversy involving the purchase of the parking lot for twice what a city-hired appraisal said the land was worth. "We are recouping our cash from that transaction," Pacheco said.
Politics: After battling redevelopment officials for a decade, a fed-up Mildred Weller is headed for Arizona. 'The city is totally dysfunctional,' she says.
By PATRICK MCGREEVY, Times Staff Writer
Mildred Weller spent the last decade as the proverbial wrench in the gears of the Community Redevelopment Agency, taking powerful politicians to court, badgering bureaucrats and even reducing one city official to tears. As president of North Hollywood Concerned Citizens and a member of the redevelopment agency's elected Project Area Committee, Weller was the agency's chief critic in North Hollywood, charging that it failed to revitalize the community despite spending more than $110 million. But Weller has fired off her last scathing letter, and pounded her last table. She and her husband, Ed, have sold their North Hollywood office building and packed their marketing business off to what she hopes will be greener pastures in Tucson.
Weller said her disgust with the lack of progress by the agency in staving off the spread of blight in North Hollywood was a key factor in her decision to move out of state. "The city is totally dysfunctional," Weller said. "I was born in Los Angeles, and I saw a beautiful city turned into a ghetto."
Some North Hollywood civic leaders privately welcome Weller's departure, saying she was an obstructionist. Others regret her leaving. They say she could be an asset now that the Metropolitan Transportation Authority has opened a new subway station and a developer has proposed a major entertainment and office complex. "I hope she will come back and visit in two years and be pleasantly surprised," said Loretta Dash, president of the Universal City/North Hollywood Chamber of Commerce. Dash politely said she and Weller "had different perspectives."
But others said Weller kept the city agency from running roughshod over homeowners and merchants in the area, energizing the community to stand up for its rights against a powerful agency. "She had a tremendous impact," said Glenn Hoiby, who chairs the North Hollywood Project Area Committee, created by the City Council to oversee redevelopment. "She put in hundreds of hours to get people involved in what was going on." Weller said she believes she served as a check on the CRA's powers.
"I got them to be more realistic about what they do by exposing their failures," she said. A stickler for detail, Weller recently turned over to other activists more than 40 boxes of documents she had collected in her decade-long battle against the CRA. Hoiby has been elected to replace Weller as president of the 40-member North Hollywood Concerned Citizens, and he vowed to keep up the pressure.
Critical of Developer Perks Weller, who was born in East Los Angeles and moved to the San Fernando Valley in the 1950s, believes it is wrong for the CRA to divert property tax money from police and fire services to pay for a bureaucracy that provides incentives to developers. In 1992, she led a group of CRA critics that won election to the Project Area Committee, frustrating City Council members who supported redevelopment efforts. Council President John Ferraro, who represents much of North Hollywood, persuaded the council to dissolve the panel and hold new elections. The anti-CRA block won again.
In an incident that cemented Weller's reputation in North Hollywood, Ferraro sent one of his deputies to take control of the Project Area Committee after Weller had become its chair. Rather than give up her position, Weller ruled Ferraro's aide out of order. "[The aide] tried to say, 'I'm taking over,' but I pounded this large gavel I had, and she finally walked out in tears," Weller recalls.
A few years later, Weller was a principal in a lawsuit that blocked extension of redevelopment activity in North Hollywood for more than a year on grounds that the City Council had not complied with rules requiring public input. "I certainly did not agree with her views of redevelopment," said Keith Richman, a former agency commissioner. "But Mildred Weller was a conscientious person who was interested in making North Hollywood a better place."
Weller also was part of a group that secured a legal opinion from the state attorney general that concluded the agency was wrong to exclude PAC members from information on developments in the project. The Wellers recently sold their large North Hollywood office building, home for their food marketing business. The building, which the Wellers bought in 1969, is just a few blocks away from ground zero for redevelopment, the corner of Lankershim and Magnolia boulevards.
Area Has Become 'Disaster,' She Says Nearby, a proposal has existed for more than a decade to transform vacant land into a major office and entertainment development. That project has not been built, although redevelopment officials are still trying to secure a developer. Not even the opening of a new subway station a few blocks away from Weller's building could convince her to stay. Vast acres around the station remain undeveloped.
"We just felt the whole area was a disaster," Weller said. "I'm sure the people at CRA are going to throw a party to celebrate my leaving," she added
Redevelopment: Six-month extension from CRA will allow firm to finish proposal for huge retail and office complex near Red Line terminus.
By ANNETTE KONDO, Times Staff Writer
The developer who wants to build a 2-million-square-foot retail, hotel and office complex in North Hollywood received a second extension Thursday to allow more time to complete the proposal. Developer J. Allen Radford won the extra six months from the Community Redevelopment Agency board. [Now 7 months later still no plans]
One agency official said she was confident the developer would be able to show he has the financing for preliminary work--including the environmental impact report--as well as the $400 million to build the redevelopment project. The board did require Radford's JARCO development company to demonstrate within two weeks that it has the $500,000 necessary to complete the environmental report. "Before the City Council acts on the extension, he must show he has that," said Lillian Burkenheim, the CRA North Hollywood project manager.
After the board meeting, Radford said the EIR and much of the other preliminary work was 80% complete and the $500,000 of funding was in place. He said a number of potential tenants had signed letters of intent for 291,000-square-feet of retail space, including restaurants Johnny Rockets and P.F. Chang's China Bistro.
"Old Navy wants to be there; that would be about 20,000 square feet," he said. Three health clubs/gyms have submitted proposals and "within the next 30 days, we will have a theater chain."
Many residents and business owners, however, continue to question the viability of the project. The Red Line subway opened its North Hollywood station to enthusiastic crowds three weeks ago, yet much of the area surrounding the sparkling new station remains dusty lots and struggling businesses.
"It's been stagnating," said Glenn Hoiby, who chairs the citizens committee that is advising the CRA about the project. "I don't think there is a real commitment by the CRA to get a developer who is able to move forward with a realistic plan and have the financing available."
Hoiby, an attorney who owns a building a few blocks south of the subway station, said the local business community has suffered during the redevelopment project delays.
Loretta Dash, president of the Universal City-North Hollywood Chamber of Commerce, said she is also disappointed by the slow pace of redevelopment. "He's trying to get it leased up," Dash said. "It's been slow going for him and so it's slow going for us."
The CRA first approved a six-month period of exclusive negotiations with Radford in March 1999 with an option to extend the talks for an additional 90 days. The original redevelopment proposal was a 43-acre project with 10 sound stages and 400 condominiums, but Radford said he was unable to sign long-term leases for the sound stage tenants.
In March, Radford cut the project size by more than half to 22 acres, with the revised plan including a 250-room hotel, 14-screen movie theater, a health club and more than 200,000 square feet of retail and restaurant space.
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