Audit Faults CRA on Minority Business Role

The Los Angeles Community Redevelopment Agency overstated its participation in a city program designed to promote minority- and women-owned businesses, according to an audit released Friday by the city administrative officer.

The audit found that the redevelopment agency claimed credit for awarding more than $840,000 worth of work through the program last year to companies that actually did not fit the city’s criteria.

According to the report, the CRA statistics lumped in ineligible firms with those that are eligible for the city’s Minority and Women Business Enterprise Program, initiated in 1983 in an attempt to increase the city’s business with such companies.

That practice, the audit concluded, “overstates reported progress in helping legitimate . . . firms get business with the city.”

The city requires companies to be 51% owned by minorities or women in order to participate in the Minority and Women Business Enterprise Program. But auditors found that CRA policy is to claim credit for participating in the program when the companies it hires are only 25% owned by women or minorities. Moreover, the report found that, in practice, the CRA gives itself credit even when the companies have less than 25% minority and women ownership.

The audit was released several hours after Mayor Tom Bradley announced that he was ordering the creation of a centralized, independent city office that would “eliminate the inconsistencies” in the way city departments administer contracts under the program.

Mark Fabiani, Bradley’s chief of staff, said the mayor’s announcement was not connected to the audit, which he said the mayor is still reviewing.

But, he added, “ironically, what the mayor did today seems to go a long way toward solving the problems identified in the (city administrative officer’s) report.”

The audit drew harsh criticism from Councilman Zev Yaroslavsky, who branded the CRA “a rogue agency” and called on Bradley to immediately order redevelopment officials to bring their policy in line with that of the city.

“This is a travesty,” Yaroslavsky declared.

CRA officials, however, defended their policy and said there is no need to change it to conform to city guidelines.

“Our policy was developed five years before the city even had a policy,” said Richard Benbow, the agency’s deputy administrator for equal opportunity and contract services. “We’re pioneers in this area.”

Benbow said that he believes the CRA’s guidelines encourage white-owned firms to give minorities and women an equity ownership position. Moreover, he said, “the overwhelming amount” of contracts under the program are awarded to firms that comply even with the city’s standards of women or minority ownership.

According to the audit, last year the CRA credited itself with awarding 24% of its contracts for public improvements, demolition and professional and technical services to firms with minority and women ownership, for a total of $3.6 million.

But the actual percentage under city guidelines was 18%, or $2.7 million, the report said.

The report noted that this figure is comparable to that of other large city departments. The Harbor Department, for example, reported 21% participation in the program, while the Department of Public Works reported 20%, as did the Department of Water and Power.