Stalled Park Seen as Sign of CRA Flaws

For six years, Nineth Anton has watched impatiently as a cluster of vacant buildings in her Hollywood neighborhood has drawn vandals, trash and vagrants.

Her frustration over the blighted properties has only grown with the knowledge that they are owned by the Los Angeles redevelopment agency.

A fading sign on one graffiti-scarred building that boasts “The Future Site of Selma Park” is no consolation.

“We need a park here, but I don’t know why they put up that sign if they weren’t going to do anything,” Anton said, staring out from her Selma Avenue apartment at the abandoned buildings across the street.

The city’s $130-million redevelopment program in Hollywood, the object of her concerns, has tallied some successes, most notably the ongoing construction of the future home of the Academy Awards--part of a $385-million shopping and entertainment center at Hollywood Boulevard and Highland Avenue.

But Selma Park is a reminder of how the massive city redevelopment program has been a mixed bag overall. The park is victim of a scramble at all costs by city officials to keep Capitol Records and its 160 jobs from leaving its landmark building in Hollywood. The toll includes circumventing normal city procedures, city records show.

Redevelopment officials diverted $1.48 million set aside for other projects, one-third of which was for the park, to buy a Hollywood parking lot from a politically influential businessman. The agency paid nearly twice what a city appraisal said the parcel was worth, records show.

Originally, a parking garage was planned for the parking lot, located on Argyle Avenue just east of the Capitol Records tower, to serve the needs of Capitol employees. But like Selma Park, the garage has not been built. Nor will it ever be built on the site the city purchased.

Instead, the city redevelopment board is scheduled today to approve a new, multimillion-dollar deal to keep Capitol in Hollywood.

Six years after they began the odyssey, those involved in the effort to keep Capitol Records in Hollywood say that their work is about to pay dividends.

“We will have gotten at least $15 million in improvements to the Capitol Records building and we’ve kept an icon in Hollywood,” said Deputy Mayor Rocky Delgadillo, who led the pact as head of the mayor’s Office of Economic Development.

The deal to be considered today will bring the government investment in keeping Capitol in Hollywood to $4.1 million, while Capitol will put $21 million into sprucing up its campus, buying adjacent land and building a parking garage on Vine Street, according to Jeffrey Skorneck, the CRA’s project manager.

As part of the new agreement, Capitol is required to buy the adjacent Argyle Avenue parking lot from the CRA for the full $1.48 million the agency paid, although the agency would provide about $490,000 to Capitol’s renovation of a nearby office building.

Capitol plans to use the lot for surface parking in the near term but may utilize the site in the future for expansion of its campus, officials said.

The package would result in Capitol adding 80 jobs to its Hollywood operations.

“Capitol is eager to begin implementing all aspects of the deal, which will not only benefit Capitol but will make significant improvements to our Hollywood block,” said Heidi Urbina, vice president of business development for the music company.

For some city officials and Hollywood residents, how the city got to “the deal” is a lesson on how government should not behave.

At the center of that controversy is the agency’s decision to pay Ullman Investments Ltd. $1,459,000 for a small parking lot on Argyle Avenue that a city-hired appraiser said was worth $795,000. The purchase also cost the city about $24,000 in closing costs.

Councilman Mark Ridley-Thomas said the transaction shows how city officials can lose sight of proper procedures and cut corners to achieve a politically popular goal, such as keeping a high-profile employer from leaving the city.

“The people of the project areas in South-Central Los Angeles have to fight for every dime they get, and here we have an action that is wasteful at best, and fraudulent at worst,” Ridley-Thomas said.

Three years ago, the agency was facing the worst financial crisis in its history, having mailed out layoff notices to 10% of its employees, put projects on hold and slashed its budget by nearly a third in the previous three years.

Against that background, agency officials involved in keeping Capitol in Hollywood hired appraiser Nancy Berry-Becker, who reported Feb. 13, 1997, that the 26,505-square-foot lot on Argyle Avenue was worth $795,000.

When Mayor Richard Riordan’s office sought federal reimbursement of $1.48 million to buy the property, federal officials rejected the request, stating that the price was overstated.

“We looked at it,” Kenneth Feldman, the project manager for the federal Economic Development Administration in Seattle, said in a recent interview. “They paid a lot more than what the property was appraised for.”

Ann Marie Gallant, deputy administrator of the CRA, asked city appraisal manager Frank McGee to reconsider the appraised value, McGee said.

“She wanted me to look it over again and see if there was a way we could come up with a higher value,” said McGee, who hired Berry-Becker for the appraisal. “I went out and rechecked all the data. I still agree with the price [the appraiser] came up with. Why [the city] paid more, I don’t know.”

Shortly after McGee told Gallant the appraisal was accurate, Gallant contacted a separate appraisal company about doing another report.

McGee said the second appraisal was done without his involvement.

“The policy is to go through me,” McGee said. “It was unusual. I don’t know if it had ever been done before that way.”

The second appraisal, completed on April 1, 1998, set the value at $1.53 million. Three months earlier the CRA board allocated $1.48 million for the purchase.

Without federal funds to reimburse the agency, officials took the money from the Selma Park project and other Hollywood programs that would have gone ahead otherwise.

Appraiser James J. Reid, who set the value at $1.5 million, said the highest and best use of the Argyle Avenue property would be for an office or retail commercial development.

The first appraisal conducted for the city concluded that the property’s location, north of Hollywood Boulevard and fronting Argyle Avenue, “would in our opinion, diminish its desirability as an improved property.”

The redevelopment board voted to pay the higher price Feb. 9, 1998, after CRA officials including Gallant assured commissioners that the purchase price was fair. At the meeting in which the purchase was approved, Gallant did not discuss the lower value set by the appraisal.

In a recent interview, board member Christine M. Robert, who voted against the deal, said she thought the board was misled into believing the appraisal supported the $1.45-million purchase price.

Robert and Ridley-Thomas are calling for an investigation by an agency independent of the CRA.

“It is absolutely outrageous the amount of money they paid,” said Chris Shabel, a member of a citizens panel formed to oversee redevelopment in Hollywood. “It’s like the Army paying $600 for a toilet seat.”

Gallant agreed in July to resign and was given four months’ severance pay. She could not be reached for comment for this story.

Steve Ullman, who sold the Argyle Avenue parking lot to the city, owns and operates dozens of parking lots in Los Angeles. The Ullman family and its businesses are major political donors, having given $7,000 in June to Delgadillo’s campaign for city attorney.

Councilwoman Jackie Goldberg, whose district includes Hollywood, said she had not been informed of the two appraisals. Goldberg said the Ullman deal was orchestrated by Riordan’s office.

“It was their call. This one was the mayor’s mistake,” Goldberg said.

Goldberg, who is running for state Assembly, returned all $5,000 in contributions from an Ullman family member in January after she said she realized that part of the development plan was still pending.

Jerry Scharlin, who took over last year as the CRA administrator, said an internal review concluded that the agency acted reasonably, and said the CRA will not be harmed because the Argyle Avenue parking lot will be sold to Capitol Records for the price the city paid to acquire it.

Asked if the Capitol Records deal was a factor in Gallant’s departure, Scharlin said, “You can read between the lines.”