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L.A. has failed to collect $48 million in overdue fees from apartment owners, audit finds [Updated]

December 14, 2010 | 10:19 am

Los Angeles has failed to collect on an estimated $48 million in fees that it charges to the owners of apartment buildings to pay for city inspections and other programs, according to an audit prepared by city Controller Wendy Greuel.

The review of the Housing Department's billing practices found that three-fourths of that money was five or more months overdue. And an estimated $17.6 million came from accounts that were more than 2 years old, the audit states.

Greuel planned to discuss her findings at a Tuesday morning press conference with Doug Guthrie, the man picked by Mayor Antonio Villaraigosa to run the Housing Department. In her report, she said the agency should turn over a far greater share of its overdue fees to collection agencies.

Unpaid bills are an ongoing worry for Greuel and City Hall, which faces a shortfall of nearly $350 million in the budget year that starts July 1. A panel convened to study the issue found that $232 million in nontax invoices were more than two years overdue and therefore nearly impossible to collect.

The City Council responded by taking the first steps toward creating a so-called "collections sheriff" to address the problem.

The fees studied in the audit are charged to landlords and help ensure that apartments are properly maintained and rents are not increased beyond the amount established by the city's rent stabilization ordinance, according to Greuel's office. The council is debating a proposal that would reduce the amount that the city's landlords can charge in rent-controlled apartments in years when inflation is 2% or less.

[Updated at 10:28 a.m.: Guthrie described the audit as an “excellent report” and said much of the $48 million comes from delinquent fees and penalties that are imposed for late payments.

“We can do a much better job both in writing off those fees that are uncollectible and doing a better job of just managing that aspect of the program,” he said.]


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-- David Zahniser at Los Angeles City Hall