Council Urged to Delay Deal to Keep Capitol Records

City Controller Rick Tuttle suggested that the Los Angeles City Council delay action on a deal to keep Capitol Records in Hollywood, disclosing Friday that his office has launched an audit of the controversial transaction.

The Times reported that the Community Development Agency bought a parking lot as part of an early version of the deal for nearly twice what the agency’s appraisal said it was worth. A second appraisal that justified the $1.5-million price was done after the agency board approved the purchase in 1998.

The deal has since been restructured so that Capitol will buy the parking lot from the CRA for the full price the agency paid, although the agency will then provide $490,000 of the money toward renovation of an office building for Capitol.

Tuttle disclosed Friday that the Capitol Records deal is being examined by private auditors as part of a city controller’s audit of financial controls in the redevelopment agency.

“In light of the controversy over the Capitol Records project, I have asked the [auditors] to issue an additional report stating the facts of the Capitol Records project as they find them,” Tuttle said in a letter to the City Council. He said the report should be completed by the end of October.

CRA officials voiced concerns about further delays in a project that is scheduled for City Council consideration next week.

“This project really does need to move forward,” said Jeff Skorneck, project manager for the CRA. “Any improprieties that existed, if any existed, were from two or three years ago.”

CRA administrator Jerry Scharlin has said that additional controls have been put in place regarding the valuation and purchase of properties.

City Councilwoman Jackie Goldberg, whose district includes Hollywood, said Friday she would talk to Tuttle to determine whether his concerns warrant a delay. Earlier this week, she said she had urged approval of the latest version of the deal, noting that the city’s investment of $4 million would reap private investment of more than $29 million.