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, as part of an early version of the deal, the Community Redevelopment Agency bought a parking lot for nearly twice what an agency 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 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 one issue being examined by private auditors as part of a City Controller audit of financial controls in the redevelopment agency.

“In light of the controversy over the Capitol Records project, I have asked [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 audit report should be completed by the end of October.

“Should council members feel that additional independent information on the facts surrounding this transaction would be helpful, they may wish to hold the Capitol matter until then,” Tuttle wrote.

CRA officials voiced concerns about any further delays in a project that is scheduled for the City Council 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.”

Skorneck said he was interviewed extensively about the project by auditors Monday.

CRA administrator Jerry Scharlin has said that additional controls have been put in place to make sure there is additional oversight in the valuation and purchase of properties.

City Councilwoman Jackie Goldberg, whose district includes Hollywood, earlier this week urged approval of the latest version of the deal, noting that the city’s investment of $4 million will reap private investment of more than $29 million.

Goldberg said Friday that the original appraisal, which set the value of the Argyle Avenue parking lot at $795,000, was unrealistic, given the potential valuable uses for the land.

Councilman Nick Pacheco, who heads the council’s committee on redevelopment issues, has also urged council approval of the new deal. He downplayed the controversy involving the purchase of the parking lot for twice what a city-hired appraisal said the land was worth.

“We are recouping our cash from that transaction,” Pacheco said.