New Audit Ordered for Agency

City auditors announced Wednesday they have expanded their review of the Los Angeles Community Redevelopment Agency, citing “severe” problems identified in a partial audit.

City Controller Rick Tuttle said those problems prompted him to order a second audit to look at other financial operations of the CRA, including property management and loans.

“We decided further work was needed,” Tuttle said. “I’m directing an additional audit to identify and examine key, high-risk areas in the business practices of the CRA.”

An audit by the controller last November found that the redevelopment agency bought seven properties for $1.57 million more than the appraised value and often failed to use competitive bidding in hiring consultants.

The Times has reported that the agency paid $1.45 million for a Hollywood parking lot on Argyle Street that a city appraiser said was worth $795,000. The purchase was made as part of a plan to build a parking garage to serve Capitol Records and keep the firm from leaving Hollywood.

In all seven property transactions, auditors said appraisal amounts were not disclosed to the CRA board and the City Council, which approved the purchases.

The new audit, to be conducted by a private accounting firm, will look at how agency loans are approved, how the agency makes the public aware of the availability of loans, and how they are overseen by the agency, Tuttle said.

“The whole situation over there cries out for additional work,” he said.

Agency officials welcomed the additional audit as a way to determine whether the agency can improve efficiency.

“We are cooperating and working with the controller to establish a review of our business practices,” agency spokesman Thomas Knox said.

Tuttle had turned over the findings of the previous audit to the district attorney’s office, which is continuing its own inquiry into possible criminal wrongdoing.

CRA director Jerry Scharlin declined to comment.

Reaction to the controller’s audit was cautious at City Hall.

Councilman Nick Pacheco, a former county prosecutor who heads the council committee overseeing the CRA, said that given the past findings, additional audits are a good idea.

“A review of the prior administration’s handling of the agency can only be healthy,” he said.