L.A. Loses $1.5 Million a Year on Mall Next to City Hall, Report Says

The Los Angeles General Services Department, criticized for its leasing practices, has revealed that the city loses about $1.5 million a year from the shopping mall next to City Hall, where the city leases space to shops, banks and restaurants.

The figure, provided to The Times, is significant because it is the General Services Department’s most detailed, and pessimistic, accounting of the finances of the mall, an enterprise that is one of the targets of a mayoral investigation of Sylvia Cunliffe, department general manager.

Brookes Treidler, assistant general manager of the department, which is in charge of leasing, said a major reason for the loss is the municipal policy of charging city employees $5 a month for parking in the mall garage--$65 a month less than the rate charged the general public.

Another reason, department records show, is the city has not leased five of the 41 sites on the mall. One of the sites is being used for a City Council office and another is being considered for a city-provided TV studio for camera crews to use while televising City Hall activities.

Cunliffe was ordered to go on leave by Mayor Tom Bradley after disclosures of possible irregularities in leasing procedures and of misuse of confidential personnel information to discredit a whistle-blowing former General Services Department employee.

A three-member fact-finding committee appointed by the mayor to investigate the charges is “looking into the mall, as well as everything else,” said the committee chairman, Robert B. Dodson.

Dodson, a retired partner in a national accounting and management firm, said a team from the city attorney’s office and the city personnel department is examining General Service Department records and has presented these records to the committee in five private sessions that have lasted about four hours each. Another session is scheduled Aug. 4.

For months, the city has tried to obtain an accurate accounting of the mall’s finances, but officials said Cunliffe did not provide them with full details. A city fiscal official, who spoke on condition that he not be named, said the City Administrative Office has asked several times for a financial report, but the department never responded.

In November, 1984, and in June, 1985, the City Council’s Finance Committee asked for a statement of the city’s expenses and revenues from mall activities. The council members received a one-page memo from Cunliffe listing revenues and giving an incomplete accounting of expenses.

A detailed accounting for 1984-85 has been completed and officials are finishing work on the totals for the 1986-87 year, which ended June 30.

The department reported that bank, shop and restaurant leases brought in $717,058 in 1984-85, up 10% from the year before. Parking, up 5%, earned $1.9 million. Revenue totaled $2.6 million.

But expenses outstripped income. Payments on a bond issue to finance the garage portion of the project when the complex was completed in 1975 totalled $2.6 million. Other expenses--salaries, insurance, utilities, custodial and maintenance--brought expenditures to $4.12 million, for a loss of $1.5 million.

Assistant department manager Treidler said the mall’s loss is similar each year.

He said the mall and adjoining garage were never intended to be money-makers. With patronage from 9 a.m. to 5 p.m. five days a week, mostly from Civic Center workers, the mall does not have the big night and weekend clientele of most malls. It is the city’s only such venture and, Treidler said, is an unusual municipal enterprise, conceived to provide shopping and restaurants for area workers after Civic Center expansion wiped out small stores and eating places in the neighborhood.

But he said the city parking subsidies for employees worsens the financial picture.

A total of 1,800 of the 2,400 parking places in the garage are set aside for city workers. Treidler said the $5 parking fee for city workers was negotiated by employee unions in bargaining with the city.

Store vacancies, along with unpaid and low rents, are other reasons for the loss, city officials said.

‘A Continuing Problem’

Last December, the City Administrative Office complained in an audit that “we found low rents to be a continuing problem, although the department has established a schedule for gradually raising rents to market value.”

In December, 1985, City Administrative Officer Keith Comrie reported to Bradley that thousands of dollars of rent was due by delinquent mall tenants.

Looking at the whole picture, city auditors found the department’s finances and management difficult to fathom, saying in a report: “Our review of property management files disclosed that rental agreements and supporting documents were haphazardly maintained and often incomplete. This would make it difficult and time-consuming to properly organize and manage the various properties in a way normally expected for a business enterprise.”

As far back as May, 1985, the City Council tried to improve mall management, when the Public Works Committee asked the department to find an outside manager to run the enterprise. The department never responded to the request, officials said.

Allegations of Mismanagement

Attention on the mall waned, but was revived with allegations of Cunliffe’s mismanagement in other areas of her responsibilities. Allegations against her include charges that she ignored a more favorable offer and rented a city-owned home in Pacific Palisades to a co-worker, and that she harassed Robert O’Neill, a former employee who complained about the Palisades deal.

In addition, the district attorney’s office is investigating a late bid that Cunliffe recommended on a city parking lot concession for a company partly owned by one of her top aides. Officials said the Cunliffe-backed proposal was submitted after other offers had been opened by city officials. When Cunliffe’s role became known, the city killed the project.