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Audit Says Rent on Firehouse Was Due City : Finance: Nonprofit organization headed by ex-Chief Manning improperly banked tens of thousands of dollars in filming fees, city controller says.

September 15, 1995|ROBERT J. LOPEZ | TIMES STAFF WRITER

A controversial nonprofit organization headed by former city Fire Chief Donald O. Manning had no authority to rent out a historic firehouse to Hollywood producers or to bank the tens of thousands of dollars that it was paid, an audit by the city controller concluded Thursday.

The city of Los Angeles, which owns old Fire Station 23, should have received more than $211,000 in film fees, interest and rent from a "caretaker" tenant who ran an unlicensed production studio at the firehouse, the audit said. Instead, the money was deposited into a private bank account controlled by Manning and former Deputy Chief Gerald L. Johnson.

"The funds should have gone to the city treasury," Controller Rick Tuttle said Thursday.

Johnson and Manning, the audit found, "did not administer a nonprofit public benefit corporation appropriately and responsibly." The two men have retired from the Fire Department and were unavailable for comment Thursday.

In 1981, Johnson co-founded the nonprofit corporation, called Olde 23's, to build a fire museum at the 5th Street Station. About 10 years ago, without city authority, Olde 23's began renting the station to Hollywood producers and banking the money.

But Olde 23's never spent any of the money toward a fire museum.

Olde 23's rental and filming activities continued for more than a decade without the knowledge of city officials until they were reported in April by The Times. Among the productions shot there were the "Ghostbusters" movies, "Police Academy II," "The Mask," "V.I. Warshawski" and dozens of commercials and music videos.

Tuttle's audit also found that Olde 23's collected $5,500 in film fees for movies that were shot at other Fire Department buildings.

In a May 11, 1995, memo cited in the audit, an official for Warner Bros.--which paid a $2,500 "donation" to use an Echo Park fire station and gave the department $5,000 worth of video equipment--told his location managers that such donations were "forms of extortion."

"These types of donations to the Fire Department," wrote Michael Walbrecht, director of studio and production affairs, "are not governed by city regulation and, under normal circumstances, should not be paid."

Interim Fire Chief Bill Bamattre said Thursday that he agreed with the audit's conclusions and that the department is in the process of turning over the station to the Department of General Services, which is responsible for renting out city buildings.

Councilwoman Rita Walters, whose 9th District includes old station 23, said Thursday that she was concerned that the money is technically in private hands. "That is of concern," she said. "The city does not have direct access to the account."

The controller's 32-page audit was based on an analysis of council files, Fire Commission minutes, Olde 23's banking statements and other such documents. Among its findings:

* At least $6,000 in film fees were unaccounted for by Olde 23's, which charged production companies a $500 daily use fee. "We could not determine whether daily filming fees were not charged, not remitted to the Fire Department or simply not deposited," the audit said.

* Old 23's collected $4,500 from four companies that never had the required city film permits. Companies are required to purchase a $250 daily film permit to use city facilities.

* The city was put in potential legal risk because fire officials failed to require that the tenant have $1.5 million in liability and property damage insurance as mandated by city law.

* Fire officials never determined whether the 85-year-old station was structurally safe for habitation.

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