REDEVELOPMENT HEAD IN CROSS FIRE; COMMISSION BLASTS ADMINISTRATOR'S FINANCIAL REPORTING.

Byline: Beth Barrett Staff Writer

In the most stinging critique to date of the Los Angeles Community Redevelopment Agency, members of its oversight commission told the City Council on Friday that CRA Administrator John Molloy has failed to account for his financial practices and now wants to take on more debt to pay the bills.

``The underlying concern is that a fiscal shortfall has been projected for five years, and the recommendation is to fill all the shortfalls with one-time funding, which is not curing those shortfalls,'' CRA Commission Chairwoman Peggy Moore said.

The commission previously refused to adopt Molloy's proposed $159.5 million fiscal 2000 budget, largely because it included about $11 million in new bonds to cover administrative costs. The agency last year estimated up to a $40 million administrative shortfall over five years.

The council voted Friday to approve the budget for 60 days, but members said they want a fuller accounting before taking final action.

Molloy said he'll more fully explain the budget but denied any improprieties. He has consistently refused to consider reducing his 200-person staff any further, saying projects would be jeopardized.

The CRA is at a critical juncture in its history and with its leadership as Molloy's $181,349-a-year contract is up for renewal in September. Both sides are engaged in behind-the-scenes politics over whether he should be retained another year.

The council majority has allied itself with Molloy, viewing the agency as a way to bring development projects, such as shopping centers, housing and theater complexes, to their districts. Downtown and inner-city council members in particular have relied on the CRA to go into areas private enterprise often shuns.

That support has remained even as the CRA's obligations have increased until next year's debt service of $67.8 million will consume more than one-third of the budget.

The challenge to the agency has come from its own commission, supported by Mayor Richard Riordan. Commissioners have said that Molloy needs to get the budget under control without taking on more debt by prioritizing projects and considering staff reductions.

Moore said the commission has been trying to get the city's attention for the last year.

``We have raised all kinds of red flags,'' she said, adding approval of last year's budget was contingent on Molloy providing a series of financial disclosures, which she said were not forthcoming.

Internal documents suggest that CRA officials have moved funds around to make ends meet, said Commissioner Keith Richman of Sun Valley. He said further the new bonds are not necessary to keep projects, most of which are in North Hollywood, on track.

Councilman Mark Ridley-Thomas, whose South Los Angeles district has been a major beneficiary of CRA projects, said the testimony of Molloy and Chief Legislative Analyst Ron Deaton, who spoke on behalf of the bonds, should be given more weight than the CRA's commission.

``Whose analysis is most compelling? Who do you rely on?'' he asked.

Nate Holden, Rita Walters, Mike Hernandez and other council members defended the CRA, without addressing its fiscal problems.

Holden accused CRA critics of wanting to withhold projects from the inner city, Walters accused Riordan of playing his own financial games, and Hernandez said the CRA needs to be preserved intact for its expertise.

However, Councilwoman Jackie Goldberg, who represents Hollywood, where the CRA has been active, said the agency's books need scrutiny, as did Councilman Michael Feuer.

``The way this budget is done needs to be changed,'' Goldberg said. ``You can't figure out what's going on in your own area with the funds.''