Audit Faults Oversight of Business Districts

Los Angeles is doing a poor job watching over its more than 30 business improvement districts, leading to shoddy accounting and questionable spending in at least one, City Controller Laura Chick said Tuesday.

In audits of two of the districts, which assess local businesses for extra services such as security patrols, trash pickup and marketing campaigns, Chick’s team found widely different practices and standards. But she also concluded that the city should improve its oversight of all the districts.

The Westwood district, which had an annual budget of about $1.2 million and was disbanded last year after complaints from businesses, was paying for “questionable” cellular phone services and paying its executive director a higher salary than authorized in his contract.

Conditions are better in a downtown district, Chick’s audit found. The Central City East Assn. spent its $1.1-million annual budget on security guards, maintenance and marketing.

But Chick’s audit also found that the district was “always late” in submitting required reports and statements to the city clerk and was unable to provide documentation on employee salaries or proof that the board had approved $9,000 in bonuses.

In a letter to Mayor James K. Hahn, Chick said the audits “raise questions about the city’s responsibility and ability to oversee and monitor the services provided through BIDs.”

In Los Angeles, the city clerk’s office is responsible for administering the districts. But Chick’s audit found that the office “believed their role was limited to assistance in organizing” the districts, collecting money and gathering reports.

After problems surfaced in Westwood, City Clerk Michael Carey said his office had done a better job of making sure the BIDs complied with their contracts. But he said his office did not have the staff or the inclination to manage the districts.