Chamber Repays Hollywood Sign Fund $46,500

The Hollywood Chamber of Commerce has restored $46,529 to a trust fund set up to maintain the landmark Hollywood sign, acknowledging that the money was used improperly to cover the chamber’s own operating expenses.

“What happened should not have happened, and by taking this action we hope to wipe the slate clean,” said Larry Kaplan, the chamber’s president and chief executive officer.

However, Kaplan said the chamber’s executive board had not decided whether to repay an estimated $45,000 in interest forfeited by the Hollywood Sign Trust during the 10 years that money from the trust was on loan to the chamber.

“That’s something we’re having our lawyers and accountants look into, and we don’t expect to reach a final decision on that for another couple of weeks,” he said.

Although he said the chamber borrowed $53,158 from the trust fund in 1979 and 1981, Kaplan said the $46,529 repayment, made last Friday, “reflects the fact that the trust also owed the chamber some money.”

Meanwhile, community activists critical of the chamber’s handling of the transaction called for the interest to be repaid immediately, and said they intend to ask the state attorney general’s office to conduct an audit of the chamber’s finances.

‘I Find It Unbelievable’

“I was shocked to read they had used the money from the trust for their own purposes, and I find it unbelievable that they would now hesitate to repay the interest,” said Ed Cohan, a lawyer representing three homeowner groups at odds with the chamber over the sign. “I’d like to know who else can borrow money interest-free.”

Last month, The Times disclosed that of $122,166 in assets reported by chamber officials last year as belonging to the trust fund, $53,158 had been on loan to the chamber for at least five years.

The famous sign atop Mt. Lee in Griffith Park is under the jurisdiction of the Los Angeles Department of Recreation and Parks. But by agreement with the city, the chamber has been responsible for its upkeep since 1978, after raising nearly $300,000 to save it from demolition.

The trust fund was established in 1978 as part of the fund-raising effort. About $214,000 of the almost $300,000 placed in the fund was spent that year to rebuild the sign. The rest was to be held in the trust fund to maintain the sign.

Under terms of the trust’s tax-exempt status, chamber officials agreed that the funds were to be used exclusively for the maintenance of the sign, and that the trust was “not to be affiliated with or controlled by the Hollywood Chamber of Commerce or any other organization.”

Fees Outstrip Expenditures

However, federal and state records showed that as of the most recent filing period, ending last June, the trust had spent only about $600 for maintenance of the sign since the fund was created, and more than $3,300 on bank and accounting fees.

In the wake of the latest developments, a Recreation and Parks official said this week his agency may want to “take another look” at its informal arrangement with the chamber over the sign’s management.

“From what’s happened, I think a better form of documentation is needed,” said Assistant General Manager Sheldon Jensen.

“What we have now should probably be replaced with a binding agreement that clearly spells out what our responsibilities are, what theirs are, where the revenues come from, where they go and who authorizes them, those kinds of things,” he said.

A source close to the chamber’s executive board told The Times last month that the money borrowed by the chamber was used to cover the chamber’s operating expenses.

In an interview this week, the chamber’s Kaplan confirmed that the money had been used for that purpose.

‘Lean Times’ Blamed

“This is a dynamic, growing organization, but it hasn’t always been that way. There have been some lean times, and the money was apparently used to get the chamber through some of those lean times,” he said.

Saying he was “not going to apologize for things that happened in the past,” Kaplan--a former chief of staff to City Councilman Michael Woo who replaced Bill Welsh as head of the chamber last month--insisted there was “nothing sinister” about the transactions.

“It’s not a question of malfeasance on anyone’s part. It’s more a case of admittedly, to some extent, sloppy practices,” he said.

Although federal tax records indicated that the trust fund loaned $53,158 to the chamber in 1984, an accountant for the chamber said that the money was actually borrowed in two increments several years earlier.

Accountant Randy Weaver said the chamber borrowed more than $38,000 from the fund in 1979, and another $15,000 in 1981. Weaver said the terms of the first loan were unclear, but that the chamber agreed to pay the trust fund 10% interest on the 1981 loan.

Although Kaplan said the interest on both loans amounts to “more than $45,000,” the chairman of the chamber’s executive board, Don Tillman, said he was unsure about the amount and that officials were “investigating as to what the interest rate is going to be.”

No Commitment

But both men were careful to say that the chamber had not committed itself to repaying interest, regardless of the amount.

Critics, who have for months pressed the chamber to disclose its financial dealings involving the sign, quickly expressed displeasure over the matter.

“It doesn’t make the chamber look very good,” said Bob Higgins, vice president of the Whitley Heights Assn. “They’ve been caught with their hand in the piggy bank and they’re sort of saying, like a child, ‘I didn’t mean to and I’ll put the money back.’ But in the meantime they’ve profited enormously off that money.”

Christine O’Brien, president of Hollywoodland Homeowners Assn., said she plans to ask the state to conduct an audit of the chamber’s finances “so that maybe, finally, we can get some straight answers. We’ve had nothing but resistance in our efforts to find out about (the sign’s finances).”

Her group and two others have joined with communities in 11 states to oppose the chamber’s bid before the U. S. Patent and Trademark Office to gain exclusive use of the word Hollywood for commercial purposes.

Built in 1920

The sign, built in the 1920s, originally spelled out “Hollywoodland,” the name of the real estate subdivision it was built to promote. Originally illuminated by 4,000 20-watt bulbs, the often-vandalized sign has long been a sore spot with residents in the nearby Hollywood Hills.

For years, they have complained of their neighborhoods being under assault from trespassers, loiterers and vandals drawn to the sign.

Residents were upset last year after the chamber announced a proposal to permanently light the sign with the help of a solar energy company. The proposal was dropped after widespread public opposition.

“I think a lot of the ill-wind being generated toward the chamber and its handling of the trust fund stems from past disagreement over the sign, no question about it,” Kaplan said. “I want to put all that behind us and look to the future.”