Council Orders Audit of Redevelopment Agency

Asserting greater control over a troubled agency, the Los Angeles City Council on Friday ordered a complete audit of the Community Redevelopment Agency.

The move signaled continuing deep skepticism of the financially strapped agency’s ability and commitment to go forward with all of its 31 redevelopment projects across the city.

The council also adopted a $340-million balanced budget for the agency, a move that had been delayed four months because of management confusion. The council conditioned its approval of the budget on the hiring of an independent auditor. CRA executives had opposed an outside audit overseen by the council.

“The audit will help present in much clearer terms those things that are out of whack and inconsistent with effective redevelopment,” said Councilman Mark Ridley-Thomas.

The agency’s new administrator, Jerry Scharlin, projected a “likely sharp downturn in revenues for future years,” but said this year’s budget represents a “substantial” work program, including $5 million in bonds for the North Hollywood project area, where a major film studio and office complex are pending.

The CRA has had to trim its work force from 350 to 190 employees in the last five years, and has seen four top executives, including Scharlin’s predecessor, leave in the last six months. The agency also faces continuing money problems.

The audit and a series of other actions Friday represent the boldest moves yet by the City Council to become involved in agency operations, stopping just short of the long-standing proposal for the council to take over decision-making from the agency’s mayor-appointed board.

Councilman Nick Pacheco said that the budget paints a “bleak picture” and that the audit is essential so the council has information on which to base tough decisions about future budgets.

“Right now, the agency can use a fresh look and a fresh perspective, given the potential problems,” Pacheco said.

Scharlin had initially objected to the audit on the grounds that it is the role of the semi-independent agency, not the council, to undertake a comprehensive review of its finances and that the agency has hired consultants to help it reorganize.

“I disagree in principle with [the] recommendations, which strike at the very core of the agency’s governance,” Scharlin wrote in a letter to council members Wednesday.

But Friday, Scharlin said he had decided not to press his objections, in the spirit of compromise that could result in the City Council helping the agency solve its financial problems.

Although the $340-million budget adopted Friday is balanced, the agency has asked the council to provide up to $9 million annually in general fund money to the agency to keep work going.

“We’ll work with them” on the audit, Scharlin said after the meeting. “The important thing is that the [agency’s] work gets done.”

A priority for Scharlin has been making sure the agency can pay off the bonds used to redevelop Bunker Hill downtown--due to mature in 2018--despite a steep drop in tax revenue to the agency.