CRA Approves $4 Million to Keep Capitol Records

The Community Redevelopment Agency board agreed Thursday to invest $4 million in a development deal that will keep Capitol Records Inc. in Hollywood, but only after one board member complained that she was misled about the value of a key property in the deal.

CRA officials said the agreement the board sent to the City Council for final action will result in Capitol Records spending more than $21 million to renovate its landmark tower and a nearby building.

“We are delivering on a promise made five years ago,” said Jeff Skorneck, the CRA’s manager of the project. “We are keeping an important entertainment industry icon in Hollywood.”

The expansion planned by Capitol will add 80 jobs to its campus, he said.

Board member Christine M. Robert joined the rest of the panel in voting for the agreement, but first she voiced concerns about one element of the deal.

The board voted in 1998 to spend $1.45 million to buy a small parking lot east of Capitol Records on Argyle Avenue for development as a parking garage to serve the music company.

The Times reported Thursday that an agency-hired appraiser had set the value of the lot at $795,000. About a year later, the board voted to pay the $1.45 million for it. Meanwhile, an agency administrator, who has since resigned, had gone outside normal procedures to get a second appraisal that justified the $1.45-million purchase price after the board vote.

The federal Economic Development Administration, which the city had approached to help with the deal, refused to reimburse the CRA for the purchase, accusing the agency of overpayment. As a result, the agency had to divert money to the purchase that had been earmarked for development of Selma Park nearby.

Robert told her colleagues that she had raised questions about the appraised value of the property.

“I feel as if there is some kind of obfuscation,” she said.

Board member Doug Ring said the new development agreement approved Thursday requires Capitol to buy the Argyle Avenue parking lot from the CRA for the full amount paid by the agency, although about $490,000 of the money would then be provided by the agency to renovate a building for Capitol.

“Whether we overpaid or underpaid is in large measure an academic discussion,” Ring said.

Robert disagreed, admonishing CRA Administrator Jerry Scharlin to put safeguards in place to prevent the agency from overpaying for property in future deals.

“Be that as it may,” she responded to Ring, “taxpayer Robert has some concern about finding out that an agency might find itself paying more for a property than it was appraised at. I hope for the future this does not come up again.”

Scharlin said afterward through a spokeswoman that some safeguards have already been put in place, including review of all development proposals by a panel of administrators not directly involved in the project.

A reorganization plan pending before the City Council would provide further safeguards by increasing professional services, including analyst positions, in the agency, said Julie Benson, a spokeswoman for Scharlin.

Benson said Thursday that other funds are being proposed for Selma Park’s improvement and that work may begin on the project next spring.

The new deal for Capitol Records now heads to the City Council, where members Mark Ridley-Thomas and Laura Chick said it will be closely scrutinized. Ridley-Thomas called the agency’s handling of the parking lot purchase “shocking.” He said he will ask the council’s chief legislative analyst to make a thorough analysis of the Argyle Avenue transaction and may ask the city controller or some other auditing entity to weigh in as well.

“An audit is the minimum of what ought to happen,” Ridley-Thomas said.