Los Angeles Business Journal

City Controller to Probe Billing Practices

By Howard Fine Wednesday, October 3, 2012

Los Angeles City Controller Wendy Greuel announced Wednesday that she will launch an investigation of billing practices at the city’s Department of Building and Safety after an audit by her office found overcharging as well as undercharging.

Greuel, who is running for mayor of Los Angeles, said her office’s audit found that the Building and Safety Department arbitrarily charged for permit fees when not required for projects valued under $500 and charged extra fees for projects requiring multiple permits. Business and building owners must often obtain multiple permits before opening their establishments or buildings.

“People who do business with the city expect more and deserve better,” Greuel said in a statement accompanying the release of the audit. “At a time when everyone is struggling to get by, these careless mistakes and overbillings are unacceptable.”

The audit also found instances of undercharging. For example, the audit said the department does not always verify estimated construction costs provided by customers in permit applications, thereby allowing customers to understate costs and shortchange the city on its share of permit fees.

Responding to the audit, Building and Safety General Manager Robert “Bud” Ovrom said he did not believe these billing problems were pervasive.

“We collect more than $100 million a year in fees and this audit stated that there were a ‘few instances’ in which overbilling or underbilling occurred,” he said.

Nonetheless, he said he would work with Greuel’s office to review his department’s billing procedures. “If there are any defects, we will correct them.”