Controller’s Office Urges Audit of Quake Loan Program

Citing lax oversight, the Los Angeles controller’s office Wednesday recommended an audit of a $321-million earthquake loan program, saying money from the program has been used on questionable home improvements such as landscaping and the replacement of undamaged appliances.

In a letter to city officials, Controller Rick Tuttle also contended that the housing officials who run the program have not adequately monitored construction projects to ensure that borrowers abide by federal labor laws.

Failure to meet federal labor laws--which require paying “prevailing wages” and hiring local workers--could force the city to repay the federal government for the grants used, he said.

But Housing Director Gary Squier rejected the criticism, saying most of the claims are “unfounded or based on a misunderstanding of the program’s intent or guidelines.” But Squier has requested funding to hire a private firm to help his department monitor prevailing wages.

So far, the city has issued about $310 million in no- and low-interest loans and has about $10 million remaining in the program’s funding pool.