Hollywood restaurateur Walter Scharfe owes the city of Los Angeles more than $150,000 in back rent for a city-owned parking lot he leased near his renowned Brown Derby restaurant, according to a report prepared by the city's Department of Transportation.
The city has terminated the six-year-old lease agreement because of the debt, and the city attorney's office may take Scharfe to court to collect the money, Assistant City Atty. Shelley Smith said.
The Vine Street lot, which is open to the public as well as Brown Derby customers, is now being temporarily managed for the city by System Parking, the same firm Scharfe had hired to run it. Under the lease agreement, Scharfe was required to pay the city $7,500 per month for the 260-space lot, which charges $4 a day for parking.
Scharfe acknowledged in an interview last week that he owes the money but said he intends to repay the city before the end of the year. He said he inadvertently fell behind in payments after the death of his wife, Elisabeth, five years ago. Since then, he said, "I just couldn't get the funds fast enough."
"Now I think we are ready to get our act together," he said. "I lost sight of it. It was stupid."
Smith said Scharfe failed to make more than 20 monthly payments to the city totaling $170,000, including interest. Since the city discovered the unpaid bills in April, Scharfe has repaid $20,000, but Smith said he has made no payments since August.
"Our present intention is to review the file, collect as much additional information as possible and file a lawsuit to collect the monies if necessary," said Smith, who took over the case last month after a city investigator reported that Scharfe had stopped making repayments.
Scharfe's debt was the second uncovered during a comprehensive review last spring of the city's off-street parking program, which officials say has suffered from years of neglect and poor management despite an urgent need for additional parking in many areas of the city.
Auditors found parking lot agreements that had not been updated in two decades, that were not competitively bid and that were rarely--if ever--monitored by the city.
"Nobody was watching what was going on," said Alice Lepis, who has headed the $1-million-per-year program since April. "That is clearly not the approach we like to take in this day and age. We are writing contracts for a shorter period of time, and with more oversight."
Several months ago, officials revealed that the Los Angeles Business Council, headed by city Housing Authority Commissioner Dori Pye, had failed to turn over $53,000 it collected while managing a city-owned parking lot in Westwood. Smith said the city attorney last month sent a final bill to Pye's group for more than $63,000, which includes interest on the outstanding debt. The city has also terminated its parking lot agreement with the business council.
The Department of Transportation and city attorney have also been looking at the financial books of Allied Auto Parks Inc., the firm hired by the business group to run the Broxton Avenue lot, city officials said.
In an effort to get the off-street parking program back on track, the City Council voted in August to spend more than $400,000 to hire staff and buy equipment. In a report prepared for an upcoming meeting of the council's transportation committee, Department of Transportation General Manager S. E. Rowe said the money will allow the department to correct problems.
"The department now has the staff resources to adequately administer the operation and maintenance of the off-street lots under its jurisdiction," Rowe said.
The report, which also identified the unpaid bills owed by Scharfe and the Los Angeles Business Council, said the department has instituted several reforms in response to problems uncovered in three separate management audits over the past year.
For the first time, the department is requiring detailed accounting of revenues by its private operators and is imposing rigid late-payment penalties, Rowe said. The department is also conducting regular audits of the parking lot operations and is putting all of the agreements through a competitive bidding process. The city is currently seeking bids to run the Broxton Avenue lot, for example, and it is expected to seek bids for the Vine Street lot early next year.
The city is also conducting random inspections of the lots to verify that operators are charging rates dictated by the agreements. Lepis said inspectors, for example, discovered in September that the operator of a city-owned lot in Venice was charging a weekend daily rate $2 above that allowed by the city.
"Some of these guys had been cranking (the prices) up, and they hadn't gotten permission," Lepis said. "We have put a stop to that."