Grand Jury Points to Pomona Renewal Flaws

The Los Angeles County Grand Jury has concluded that the Pomona Redevelopment Agency is so understaffed and loosely managed that ambitious rebuilding programs have been dominated by developers, including some whose backgrounds were not promptly checked.

The Pomona Redevelopment Agency has no formal procedure for evaluating developers, monitoring projects or tracking public money spent on each project, according to a private auditing firm hired by the grand jury.

The Redevelopment Agency also needs to do more to encourage construction of housing for the city’s large population of low- and moderate-income residents, the grand jury concluded.

Auditors studied city files on the $96-million World Trade Center project, the slow-moving Cobblestone Creek condominium project and several southwest Pomona developments, including the highly successful Phillips Ranch subdivision.

In the case of the trade center, the city did not complete a preliminary background report on promoter H. Thomas Felvey until January, 1986, the grand jury report said. By then, he had held development rights to the prime city-owned downtown site for more than a year, and it was not until 1987 that the report was made public. The check revealed that the state had suspended the licenses for two of Felvey’s companies, the report said.

“The (biggest) problem we found was improper management,” grand jury foreman Manuel A. Gallegos said in an interview Wednesday.

In response, City Administrator A. J. Wilson said the audit report does not support Gallegos’ conclusion. Wilson said he does not see the auditors’ findings as being particularly critical of the Redevelopment Agency.

“They investigated all of this and did not find improper expenditures,” said Wilson, a former Santa Ana city manager who became Pomona’s chief administrator two months ago.

“What you are talking about here is record-keeping and methods of record-keeping which have already been corrected.”

Gallegos said the grand jury issued its report Monday, two months ahead of schedule, so that city officials could consider it before acting Monday evening on a request by Felvey for a four-month extension of a May 1 deadline to secure financial backing for the long-delayed project.

The City Council turned down Felvey’s request, but not because of the grand jury report, Mayor Donna Smith said. Smith said that she first heard about the report after the council meeting and that no council member had a copy at that time.

“It’s a real shame,” Smith said, “that there’s a report floating around out there that could assist us in making improvements in the Redevelopment Agency and no one has cared enough to share it with the council. We have not seen it.”

Several copies of the report were distributed at City Hall on Monday, said city Economic Development Manager Ron Smothers. He said he did not know if a copy went to the City Council. Wilson said he did not get his copy until after he returned from the evening council meeting.

The report is the first of 12 the grand jury plans during the next several years on high-profile redevelopment agencies in Los Angeles County, Gallegos said. The grand jury traditionally has analyzed the operations of two or three redevelopment agencies a year.

Reports on the Irwindale and West Hollywood redevelopment agencies will be issued June 30 along with reports on other grand jury investigations conducted during the 1987-88 fiscal year, he said.

The Pomona Redevelopment Agency was investigated because of its “aggressive approach” to redevelopment and because of news stories about problems that had led to delays in several projects, said Gallegos, retired superintendent of the Downey Unified School District.

“We felt that the developer comes in and tells the city how it ought to be developed,” he said. “We question whether there is a plan for redevelopment.”

In response, Wilson said there “has not been a clear focus in what we wanted to accomplish” in some redevelopment areas, such as the downtown. The City Council revised its downtown plan two weeks ago, he said.

The report “properly identifies a couple of areas where we can upgrade management practices, and we have already done so,” Wilson said.

Economic Development Manager Smothers, who reviews proposed redevelopment projects, said the agency does not agree with all of the grand jury’s findings but will use the report as a guideline for improvement.

“We don’t look at their criticism negatively,” Smothers said. “We take this as good, constructive criticism. They looked at some of the worst cases, and didn’t find anything terribly amiss.”

He said the auditors’ report also mentioned several of the successes of the Redevelopment Agency, which since its founding in 1969 has helped lure more than $500 million in new development to Pomona.

About 6,000 dwellings have been built in the city since 1980, he said. And the 119,000-resident city, suffering from white flight and deterioration a decade ago, has rebounded because of redevelopment, he said.

The grand jury credited the agency with completing several projects, including a handful that have brought companies and hundreds of jobs to town. An auto mall is also progressing well, it said, and nearly 4,000 upscale homes have been built in the Phillips Ranch development.

But the grand jury concluded that Pomona redevelopment has been shaped extensively without proper planning or solicitation of competing projects and that the agency has too few controls over projects, Gallegos said.

‘Not Well Monitored’

The grand jury report, based on findings by the auditing firm of Deloitte Haskins & Sells, which does many government audits locally, said of the Redevelopment Agency:

“Internally, projects are not well documented or monitored. External relations are dominated by developers, who often act as agency staff in determining the appropriateness of certain development concepts and in providing other professional services, such as feasibility and market studies.”

Smothers said the agency follows the city’s General Plan within its 10 development zones, which include about one-third of the city. It also issues guidelines for redevelopment projects on city-owned land and solicits competing proposals when warranted, he said.

Most Pomona redevelopment projects are built on private land in response to market demand and without risk to the city, he said. As a result, the city does not need to independently determine the feasibility of the projects.

The grand jury concluded, however, that public money is at stake in the 80-acre Arrow/Towne redevelopment zone in the northwest area of the city. Developers of the Cobblestone Creek condominium project there are obligated to repay a $1.5-million federal loan and $280,000 advanced by the city for off-site improvements, it reported.

Though the condos were first approved in 1983, only 64 of the planned 296 have been built so far.

The grand jury said an additional problem is that two of five Redevelopment Agency positions are vacant.

Currently, three staff members are “trying to keep track of dozens of projects that run the range from concept to construction,” the report said. “Projects suffer from lack of sufficient attention by staff and delegation of too much responsibility to developers and other parties outside the city.”

Specifically, auditors found that background investigations of developers are not done in a consistent or timely manner; the agency has no set of policies and procedures governing its operations; it does not adequately monitor project expenses, and it has no formal mechanism for monitoring the progress of a project.

In addition, auditors said the Redevelopment Agency grants development rights before determining the appropriateness and feasibility of projects.

Not Enough Units

Wilson said a city staffer now keeps project expenses up to date, that redevelopment plans are being updated and that strict internal policies have been implemented.

The grand jury also recommended that the city study Pomona’s low- and moderate-income housing needs. State law requires that 20% of the tax revenue that goes to redevelopment agencies be used to build or rehabilitate such housing.

The city has set aside that money. However, the grand jury said that only 500 low- and moderate-income dwellings have been built in redevelopment zones.

Smothers said the city has a large inventory of low- and moderate-income housing. However, he said the city is beginning a study this month to update its assessment of housing needs in Pomona.