• The entire 1,455-word case against the Redevelopment Agency of Culver City may be found below along with detailed comments from affiliated parties
The state of California’s list of charges against the Redevelopment Agency for allegedly channeling housing funds in unintended directions is complicated by shadowy whispers about City Hall’s auditing firm of the last three years.
If the name Mayer Hoffman McCann is familiar, it may be because it audited the books of the notorious city of Bell, which, according to some sources, has stained, or done worse damage, to the huge firm’s reputation. The State Controller’s Office concluded the nationwide firm correctly followed “some” procedures.
City Hall is seeking to extricate itself from this latest thicket, announcing this morning that since its contract with Mayer Hoffman McCann has now expired, it has begun the search for a replacement.
Chief Financial Officer Jeff Muir told the newspaper this morning:
“We are going to have someone come in and look at the specific issue of the Redevelopment Agency expenditures relative to the state Senate Oversight report.
“We want a third party to take a look, and hopefully that third party will be in place in a week or two for an audit that. I believe, will take one or two months.
“I don’t believe a total recreation of our entire financial statement is necessary.”
City Manager John Nachbar, who just took over his position four months ago, told the newspaper this afternoon:
“My personal understanding is, and I am relying on staff, that the Redevelopment Agency is not in violation.
“I don’t know for certain, but I think it is very unlikely there is a problem.”
Nevertheless, he said, “we are practicing an abundance of caution.”
Here is the full Sept. 30 report by Nancy Vogel of the state Senate Office of Oversight and Outcomes:
Recently, local Culver City media have contained stories which relate to a report issued by the (the Report). The Report made observations related to Culver City’s Redevelopment Agency. City Manager and Executive Director of the Culver City Redevelopment Agency John M. Nachbar replied to a recent inquiry: “We fully complied with all applicable statutes, regulations and reporting requirements as well as all procedures required before spending affordable housing monies. Staff has given a complete explanation to the Senate Office of Oversight and Outcomes, and we have never received any notice from that office or any other state official that the City/Agency is in violation of anything.”
The Nancy Vogel report from the state Senate Office of Oversight and Outcomes:
Culver City Redevelopment Agency. Estimated city population: 40,722.
About 40 percent of Culver City’s territory falls under the purview of its 39-year-old Redevelopment Agency. Between 1995-96 and 2007-8, the agency’s low- and moderate-income housing fund grew from $3.2 million to $22.1 million. Over that span, the agency’s use of the fund for planning and administrative expenses averaged 26 percent compared to overall expenditures, according to the Dept. of Housing and Community Development.
The agency has done little to increase the inventory of affordable housing in Culver City. The agency built four new housing units for moderate-income families. It also acquired covenants to restrict 12 units to low-income residents and substantially rehabilitated 31 homes for low- and moderate-income families, according to HCD annual reports.
In 2007-08, the Culver City Redevelopment Agency reported doing “non-substantial rehabilitation” to the homes of 137 low- and moderate-income households. (Such repairs involve less than 25 percent of the market value of the housing unit.) Most of the repairs were made at the Culver Terrace Mobile Home Park. Repairs were also made under the agency’s Neighborhood Preservation Program, which provides grants, rebates, loans and deferred loans for low- and moderate-income households. The agency spent $548,934 on the rehabilitation program and $652,490 on debt service from the low- and moderate-income housing fund in 2007-08.
Culver City stands out among California redevelopment agencies for the rate at which it describes its affordable housing activities as “other assistance, ” a catch-all category created by the HCD for work that does not fall neatly into other categories such as “new construction,” “subsidy,” and “non-substantial rehabilitation.”
Over the 13-year span studied by the Senate Office of Oversight and Outcomes, the Culver City Redevelopment Agency reported 2,551 instances of “other assistance.” In 2007-08, the 638 cases of “other assistance” to low- and moderate-income residents amounted to one-third of the 1,943 total cases of such “other assistance” reported statewide.
Details in the annual HCD redevelopment report show that Culver City attributes its “other assistance” to the four programs described below. Three are operated by non-profit groups that bill the Culver City Redevelopment Agency for services:
• Alternative Living for the Aging – This non-profit group based in West Hollywood offers help to Culver City residents at the local senior center. The group provides a free roommate-matching service that seeks to link seniors with roommates in order to provide cheaper housing, companionship and a sense of safety. City officials say that they pay the ALA from the low- and moderate-income housing fund based on inquiries, referrals and matches. They say they verify the address and income of the clients reportedly helped by ALA to make sure they are low-income city residents. Payments to ALA in 2007-08 totaled $56,683, with 117 people assisted.
• Housing Rights Center – This non-profit group based in Los Angeles educates, advocates, and litigates to counter housing discrimination, according to its website. The group bills the Culver City Redevelopment Agency based on the number of Culver City residents who call for legal advice. Culver City officials say they verify the address and income of callers before paying the group from the low- and moderate-income housing fund. In 2007-08, the fund was billed $19,557 for 452 callers. The agency has contracted with the non-profit for at least 10 years.
• Home Secure – The Culver City Redevelopment Agency uses the housing set-aside fund to pay the non-profit Jewish Family Service of Los Angeles to operate a “Home Secure” program that installs grab bars, hand-held showers, smoke detectors, and other safety and security devices. The Culver City agency pays for materials and installations. In 2007-08, the agency paid $27,464 for 38 households assisted.
• Rental Assistance – The agency used $228,705 in low- and moderate-income housing funds to subsidize the rent of 32 tenant households in 2007-08. HCD officials say that services such as those offered by the Housing Rights Center do not appear to fall within the legal uses of the low- and moderate-income housing fund, and therefore the Culver City payments may be improper.
Culver City officials argue that the payments are an eligible administrative expense on par with payments for legal advice on affordable housing matters. Furthermore, they say, the work of the Housing Rights Center helps to ensure that the agency’s affordable housing work complies with a state ban on discrimination in redevelopment efforts.
Substantial surpluses mark the Culver City Redevelopment Agency’s low- and moderate-income housing fund in recent years. In 2007-08, when city officials expressed concern about triggering laws designed to limit “excess surpluses” in housing set-aside funds, the beginning balance stood at $22.1 million.
In May 2010, when all California redevelopment agencies were required to make payments to help balance the state budget, the Culver City Redevelopment Agency used $11 million from the low- and moderate-income housing fund to fulfill its entire obligation.
The agency began fiscal year 2007-08 with $22.1 million in its housing set-aside fund. It received $6.9 million in revenue that year and spent $3.67 million. Of the money spent, $2.16 million — or 59 percent — was characterized as “planning and administration.”
Here are the $2.16 million in planning and administrative expenditures, according to housing officials:
• $1,518,955 for salaries and benefits for 12 positions in the city’s Neighborhood Preservation Program. The positions include one fulltime position in each of these categories: administrative clerk, administrative secretary, housing programs administrator, housing supervisor, occupancy specialist, senior structural rehabilitation specialist, structural rehabilitation specialist and secretary. The $1.5 million also includes 3.2 fulltime housing assistants and a part-time housing specialist.
• $422,336 for city employee positions that support housing. These costs are determined through a cost allocation plan that was prepared by the consulting firm MGT of America. These charges are approved through the annual budget approval process.
• $44,000 for rent paid to the city for housing office space.
• $26,203 to Big Imagination Group for a public relations campaign that involved, according to the consulting company’s website, creating “a brand identity system that effectively conveys the community orientation of the Culver City Housing Authority, by focusing on the individuals affected by affordable housing: students, nurses, restaurant workers, homeowners – all of us.” (HCD officials say the public relations expenditure may not be permissible, as it is not directly related to the preservation, rehabilitation or creation of affordable housing. Culver City officials disagree. They say expanding outreach and awareness about affordable housing is one of the goals of the city’s Comprehensive Housing Strategy, adopted in March 2008. “The use of a public outreach firm is an eligible administrative expense due to the fact that the outreach material support the CHS which will increase the supply of affordable housing,” wrote Culver City Housing Administrator Tevis Barnes in an email to the oversight office. She added that the campaign seems to have softened community resistance.
According to Barnes, the agency’s past plan to rehabilitate a handful of housing units to be owned by moderate-income residents encountered intense opposition, to the point of litigation. More recently, she wrote, a substantial number of people supported the agency’s latest affordable housing project.)
• $21,000 to Apple One for temporary clerical support.
• $19,557 to the Housing Rights Center.
• $18,109 for office supplies and expenses.
• $14,304 for training and conferences.
• $12,400 to Westaff for temporary clerical support.
• $10,000 to DW Properties for management of a nine-unit apartment building purchased by the agency. The agency plans to rehabilitate it and sell it to a non-profit group to maintain as low- and moderate-income housing.
• $9,999 to Edmunds Associates for cost estimation on five properties the agency purchased from CalTrans.
• $9,500 to Gibbs Law Firm for help on mobile home park ordinance.
• $6,845 to Office Max for general supplies.
• $5,070 to Jack Nadel for outreach/promotional items.
• $4,600 to Keyser Marston Associates for financial analysis.
• $4,140 to Happy Software for client file maintenance.
• $3,118 for contract labor for renderings and site plans.
• $2,100 to William Landscaping for maintenance of agency property.
• $2,026 to Language Line for translation services.
• $1,196 to AmeriNational for loan monitoring.
• $561 for telephone charges.
• $349 to Nan McKay Associates for training booklets.
• $188 to Chicago Printing for business cards.
• $165 to First Advantage Safe for credit checks.
• $106 to Continental Time Clocks for time/date stamp.
• $64 to Zee Medical Supplies for first aid supplies.
Culver City Redevelopment Agency officials said during the annual budget approval process they determine that low- and moderate-income housing fund planning and administration costs are necessary per Health and Safety Code Section 33334.3(d). They did not respond to requests for a copy of the determination.
[img]1052|exact|Culver City Auditing Service||no_popup[/img]
[img]1053|exact|December 23, 2010 Letter from MHM President Hancock||no_popup[/img]
[img]1054|exact|Press Release – Mayer Hoffman McCann P C 12-21-10||no_popup[/img]
