CRA’s Interim Chief Says the Worst Is Over

Despite his familiarity with the rough-and-tumble life of corporate boardrooms, Jerry Scharlin was caught off guard by the level of controversy, intrigue and hardball politics he has experienced as interim administrator of Los Angeles’ troubled Community Redevelopment Agency.

As the City Council prepares to hold confirmation hearings to consider the four-year appointment of Scharlin to head the agency, he said he hopes his efforts to turn the agency around and provide some stability will weigh in his favor.

“I was in substantial shock. It was a very difficult and chaotic environment,” Scharlin recalled of the first part of his 19-month tenure.

“What I hoped to create was a little bit more of a rational balanced environment,” he added. “It’s hardly perfect, but it’s substantially settled down.”

The CRA uses property tax money to provide incentive for development in blighted areas, including purchasing land and selling it at a discount to builders. It also has eminent domain powers, allowing it to take private property from reluctant sellers to put together multiple parcels for large constructions. For example, the CRA is now in negotiations with a developer to reinvigorate Valley Plaza and to build an office and commercial complex next to the North Hollywood subway station.

Scharlin acknowledged he is likely to face tough questions as early as today from council members about his brief but eventful tenure.

Questions of Wrongdoing

Council members have demanded that Scharlin explain why he hired a private investigator without board approval to probe allegations of financial improprieties in the agency, instead of leaving the job to the city controller or Los Angeles Police Department.

He also faces questions about a city controller’s audit that found the agency lacked financial and management controls, leading to deals--before Scharlin took over--in which it bought seven properties for a combined $1.57 million more than the agency’s own appraisals said they were worth.

As a result of the private investigative report and the audit, the Los Angeles County district attorney’s office is looking into whether there was any criminal wrongdoing in agency land transactions.

Evidence of the challenges he faces can be seen from his eighth-floor downtown office, which overlooks the empty tracks of Angels Flight, the funicular railroad built under the CRA’s supervision.

Its two rail cars have been taken away by federal investigators probing an accident that killed one passenger and injured seven. The CRA has hired an outside attorney and a team of consultants to look into the accident.

“Suffice it to say that the agency remains very controversial, and I think the job has been more daunting than he would have anticipated,” Councilman Mark Ridley-Thomas said.

From the start, critics worried that Scharlin lacked experience.

Admirers, including Mayor Richard Riordan and the members of the CRA board who unanimously recommended his appointment, said he took an agency in financial chaos and restored order and accountability.

CRA board President Peggy Moore said he took a confusing budget and for the first time made it accessible and easy to read.

“He has done a great job,” CRA board member Javier Lopez said. “He has helped turn this agency around.”

Lopez said Scharlin strengths include his attention to detail and his strong knowledge of finance.

“I do think we have established certain foundations,” said Scharlin, a 52-year-old Encino resident. “There is the beginning evidence that some of these activities are bearing some fruit and I think it’s very important to stick with it.”

Before he joined the CRA, Scharlin spent 13 years with Victor Palmieri Co., a corporate turnaround and asset-management firm. A certified public accountant, Scharlin was recommended to Riordan by Julian Burke, head of the Metropolitan Transportation Authority, as someone who could bring private-sector management standards to the floundering CRA.

If confirmed, Scharlin’s salary would rise to $180,000 from $178,500. He is married and has two children. He went to Palisades High School and has a master’s degree in business administration from UCLA’s Anderson School of Management.

Six years ago, the agency had 350 employees managing 17 project areas. But financial problems caused by the real estate slump of the early ‘90s reduced property tax revenue to the agency, forcing the previous administrators to trim the work force to 194 employees managing 31 project areas.

While reorganizing the agency and paying down debt, Scharlin has been able to increase staff by 21 positions this year. He said the upturn in the economy has played a substantial role in helping the agency out of financial problems.

Addressing the controller’s concerns about overpaying for property, Scharlin put in place new controls, including a project review committee to examine all deals before approval.

Assemblyman Keith Richman (D-Northridge), who was on the CRA board when it appointed Scharlin as interim chief, said he was just the kind of administrator the agency needed.

“He is a top-notch manager,” Richman said. “He is an action-oriented person who wants to get things done.”

But Scharlin’s decisiveness got him in trouble.

Shortly after he took over in July 1999, he fired the agency’s No. 2 manager and its chief financial officer, saying he needed a “different team.” But the City Council later decided to pay the two managers $584,000 to settle wrongful discharge claims. They had alleged that Scharlin terminated them after they exposed misconduct by another manager who was suspended over a disputed $840 expense account claim.

The decision to hire a private investigator also drew criticism.

City Councilman Nate Holden called it a cause for concern. It also did not go over well with CRA employees, who were already suffering from low morale, said David Cochran, an official with the union representing agency workers.

“The hiring of the private investigator was handled disastrously,” Cochran said, adding that Scharlin’s long silence when faced by employee demands for an explanation “did not give employees confidence.”

Promises of a Brighter Future

With all of the reorganization and internal distractions, Ridley-Thomas said the agency under Scharlin “has all but failed to deliver on redevelopment in the areas where it is most needed.”

Scharlin conceded he has focused during the last 19 months on restoring the agency as an effective organization but said projects such as the development that will be the home of the Academy Awards in Hollywood have moved forward.

If he is given another term in office, even if it is less than four years, Scharlin promises a brighter future for the agency.

“If we can stay a steady course, then we can have good success,” Scharlin said.

“I think we have gone through the worst of it.”