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California to audit 18 redevelopment agencies

Controller John Chiang says his agency will look at the books of local entities charged with improving blight. The governor wants to use the billions controlled by the agencies to pay for schools and basic services.

January 25, 2011|By Catherine Saillant and Jessica Garrison, Los Angeles Times
  • Gov. Jerry Brown has proposed abolishing redevelopment agencies and using the funds to pay for schools and basic services. Controller John Chiang, right, wants to look into how local agencies perform.
Gov. Jerry Brown has proposed abolishing redevelopment agencies and using… (John G. Mabanglo, European…)

The state will dispatch auditors to towns and cities across California to scour the books of 18 redevelopment agencies to see how officials have been spending the billions of taxpayer dollars they take in each year to improve blight, state Controller John Chiang announced Monday.

The financial probe comes amid a deepening fight over the future of California's 400 redevelopment agencies, which control about $5 billion in property taxes a year.

Gov. Jerry Brown has proposed abolishing redevelopment and sending the money instead to counties and school districts. Brown, who would also take $1.7 billion next fiscal year to balance the state budget, argued that redevelopment is a luxury the state cannot afford at a time when it can't pay for schools and other basic services.

Many city officials, including those in Los Angeles, responded by taking hasty steps to transfer billions of dollars from their agencies to city control in a preemptive bid to keep the money out of the state's hands. Officials have also offered a passionate defense of redevelopment, saying it creates jobs and has transformed formerly downtrodden areas such as Old Pasadena, Hollywood and downtown Oakland.

The agencies to be audited were chosen to create a mix of large and small entities, as well as rural and urban, said Garin Casaleggio, a spokesman for the controller.

The agencies to be reviewed include those in Los Angeles, Fresno, San Jose and the counties of Sacramento and Riverside. They also include smaller cities such as Anderson in Shasta County, Placentia in north Orange County and the border town of Calexico.

City and county officials were cautious not to accuse Chiang's office of playing politics, but one redevelopment official wondered whether his agency was singled out for an audit because county supervisors voted last week to issue bonds to protect their redevelopment funds and traveled to Sacramento to urge legislators to reject Brown's proposal.

"It's not a surprise," said Tom Freeman, the redevelopment chief in Riverside County. "We've taken a leadership role in the state in asking the governor to solve the budget problems elsewhere instead of taking money from cities and counties."

But Chiang said he was wading into the fight to provide "factual, empirical information about how these agencies perform and what they bring to the communities they serve" as the Legislature prepares to consider Brown's proposal. He said he plans to finish his review by March.

"The heated debate over whether RDAs are the engines of local economic and job growth or are simply scams providing windfalls to political cronies at the expense of public services has largely been based on anecdotal evidence," the controller said in a prepared statement.

Many advocates of redevelopment — and even some critics — found some irony in the timing of Chiang's interest in redevelopment.

"It's interesting that all of the sudden there's a bunch of audits that are going to be happening," said Steve Duran, executive director of Richmond's redevelopment agency. "But everything's been interesting since the governor gave his 'let's kill redevelopment' speech."

For years, housing advocates and critics of redevelopment have urged the state to better police the agencies, some of which have been mired in scandal.

Reporting last fall by The Times found corruption and mismanagement at agencies throughout the state. It also found that state officials did little to force agencies to follow the law.

Many state officials, including Chiang's office, said they did not have the money to do aggressive and comprehensive audits.

"I think greater scrutiny is long overdue," said Catherine Rodman, a San Diego lawyer who has sued several redevelopment agencies over their use of housing funds. "The state has literally been hands off for half a century."

John Shirey, the head of the California Redevelopment Assn., which lobbies on behalf of the agencies, questioned whether the auditors had allowed themselves enough time to determine how much economic activity is created through redevelopment

"That is an economic study that is difficult to do, requires pretty sophisticated kinds of analyses and over a period of time," he said. His organization put out a study Monday alleging that abolishing redevelopment will result in "the loss of more than 304,000 jobs, $40 billion in economic activity and more than $2 billion in state and local tax revenues each and every year."

But Shirey said he "welcomes any factual, empirical review of redevelopment," provided it is "objective" and "not merely a response to a state attempt to abolish redevelopment."

Chiang will deploy staff to the selected agencies over the next few weeks, Casaleggio said.

In the past, the controller's office has audited whether redevelopment agencies are sharing money with schools and counties as required by law.

These reviews will go further, looking not only at accounting flaws but at whether funds are being legally spent. The controller will also ask for information on salaries and benefits paid to staff members and elected officials governing the agencies, Casaleggio said.

Officials at the Los Angeles Community Redevelopment Agency were informed early Monday of the upcoming audit, said Jim Dantona, a chief executive deputy. Dantona said the agency, which collects $190 million in tax dollars each year, welcomes a look into its accounts and operations.

"There isn't any real empirical data to show all of the things we say happen," Dantona said. "A good third-party audit that shows what does happen certainly can give that unbiased picture to the state as they are having this discussion."

Catherine.saillant@latimes.com

Jessica.garrison@latimes.com

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