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Chick Criticizes CRA Over Subsidy

The agency failed to perform adequate reviews before awarding $38 million to the developer of Crenshaw project, controller says.

September 02, 2004|Patrick McGreevy and Ted Rohrlich | Times Staff Writers

The Community Redevelopment Agency failed to adequately check the background of the lead developer of a major commercial and residential project in South Los Angeles before awarding him and his partners $38 million in public subsidies, City Controller Laura Chick has concluded.

In a letter to Mayor James K. Hahn, Chick said Tuesday that her auditors looked into the credit history of Christopher Hammond's principal company, Capital Vision Equities, and found several instances of credit problems, including county, state and federal tax liens.

The review "raised certain concerns about the financial viability of this particular project's developer," Chick wrote in the letter, copies of which were given to members of the City Council and the Community Redevelopment Agency's administrator, Robert Ovrom.

The agency agreed last year to provide $38 million in subsidies, including loans, to a consortium of developers, headed by Hammond, that includes a firm controlled by professional football player Keyshawn Johnson.

The subsidies will be spent on redeveloping the blighted Santa Barbara Plaza shopping center, at Crenshaw and Martin Luther King Jr. boulevards.

The new development, also known as Marlton Square, includes construction of a shopping center, 150 detached homes, 150 condominiums and 180 apartments for senior citizens on a 21.8-acre site.

Hahn has championed the project as attacking blight in the Crenshaw district.

Hammond, a leading developer of subsidized housing in South Los Angeles, has completed one publicly subsidized commercial development and is hoping that the successful completion of Marlton Square will vault him to the ranks of major commercial developers in Los Angeles.

He enjoys substantial community support, but has a recent history of personal and corporate financial problems.

The Times, citing court and campaign records, reported in June that Hammond and his companies had bounced three dozen checks totaling more than $200,000 from 1999 through 2003. Many were for campaign contributions to Hahn and other local politicians.

Chick, who has been feuding with Hahn and recently withdrew her endorsement of his reelection, said that Hammond's firm, in addition to tax liens, had several "entity status problems," including two suspensions by the state Franchise Tax Board and another by the California secretary of state.

She also said that the CRA had not evaluated a credit report for the firm or any of the other businesses involved in the Marlton Square development.

"The auditors did not see evidence of a thorough past performance or technical capacity evaluation of either Capital Vision Equities Inc. or of the other proposed developers," Chick wrote. She declined to comment on her letter.

Based on the findings, which will be contained in a broader audit of the redevelopment agency to be completed later this month, Chick recommended that the mayor ask the agency to obtain certificates of good standing from Hammond and his partners and conduct a thorough background credit history of each proposed developer seeking agency subsidies.

CRA Administrator Ovrom said he is looking into the charges in Chick's letter and is making sure all credit history information is gathered for the Marlton Square developers.

"We think they are all reasonable recommendations," Ovrom said, adding that some of the financial background information may already be in agency files.

Hahn is on vacation this week, but a spokesman said that many of Chick's proposed reforms are already in the works at the CRA.

Hammond did not return calls for comment Wednesday, but records indicate that some of the problems identified by Chick are being addressed by the developer, while others remain.

A foreclosure sale of Hammond's Los Feliz house, set for Tuesday on the steps of the Norwalk courthouse, was postponed by mutual agreement between Hammond and his lender. It is now set for late September.

In July, a foreclosure sale of Hammond's Malibu property, which is in his wife's name, was set, then canceled.

Capital Vision Equities settled its outstanding tax liens with the federal government in August. Records show it paid the Internal Revenue Service $389,663 for taxes it owed from 2000 to 2003.

However, records show that Hammond, as an individual, still owes the IRS $322,271 to settle tax liens.

Records also show that he and his companies owe the state of California $165,300 to settle state tax liens.

Hammond vacated the Victorian house in the West Adams district that was his corporate headquarters after his landlord won a default judgment against him in an eviction proceeding in June for failure to pay $33,580 -- more than seven months' rent, court records show.

In other recent court action, Kaiser Foundation Health Plan won a default judgment in July against another Hammond firm, CVE Development, which failed to pay a health insurance bill it had owed since January 2003 of $7,541.

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