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Audit of New Horizons is on hold

City committee suspends analysis of closed nonprofit pending word from city managers.

January 25, 2011|By Melanie Hicken, melanie.hicken@latimes.com

CITY HALL — Several audits of how thousands of dollars allocated to New Horizons Family Center were spent have been suspended after the debt-ridden nonprofit closed its doors last week, city officials said Monday.

City officials initiated the audits last year when New Horizons founder Maria Prieto announced she was scrapping plans for a long-awaited expansion project after spending $300,000 in federal funding — allocated by City Hall — on pre-development costs.

"We all felt it was necessary to look at the funding that was given to New Horizons," City Auditor Michele Flynn said.

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After months of controversy, Prieto notified Glendale officials earlier this month of the center's impending closure.

With New Horizons no longer operating, Flynn told the Audit Committee on Monday that the audits are now in a "holding pattern" pending further notice from city managers.

All federal funding is distributed on a reimbursement basis, so New Horizons had not yet received much of the Community Development Block Grant funding allocated for social services this year, officials said.

The city is also in line to be reimbursed for the $300,000 in grant money allocated to the failed New Horizons construction project after Prieto sells the vacant properties. Prieto has said a tentative agreement is in place to sell three vacant properties for $1.4 million.

Still, Audit Committee member Zareh Amirian urged officials to continue the examination of how the funds were spent.

"Are we sure the money was spent on what it was supposed to be spent for?" he said.

About $240,000 of the federal funding, city officials said, was paid directly by the city to Glendale-based George Hopkins Construction for architectural services on the now-failed project.

"I figure if there is $240,000 that went to architects, there should be $240,000 worth of architecture work done," Amirian said.

The rest of the money went to building permit fees, which have since been reimbursed, officials said.

A representative for Hopkins could not be reached for comment Monday.

Also in response to the New Horizons controversy, the City Council is slated to consider bolstering oversight of local nonprofits that receive federal grant funding through City Hall.

The new rules would require representatives of charities and social service agencies to sign documents verifying the fiscal health of their organizations, including disclosure of assets and tax liens.

The agencies would also be required to provide written proof of claimed financial backing from banks or grant providers and would have to submit third-party audits.

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