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Film Agency Inquiry May Hurt L.A. Effort

December 25, 2002

LOS ANGELES (AP) _ Seven years after Los Angeles-area politicians set up an agency to help stem the flow of Hollywood productions out of the area, its president has resigned and prosecutors are investigating its finances.

Although no criminal charges have been filed, the controversy is casting a shadow over Hollywood’s most high-profile effort to stop runaway production.

Specifically, authorities are interested in whether the Entertainment Industry Development Corp. misused public funds by authorizing hundreds of thousands of dollars in entertainment expenses and political contributions.

``This is not a small investigation,″ said district attorney’s spokeswoman Sandi Gibbons. ``This is not something that’s going to be solved very soon.″

EIDC was set up in 1995 to keep movie, TV and commercial productions _ worth an estimated $3 billion a year _ in the Hollywood area and end a trend toward cheaper locations with less red tape such as Canada, Australia and Mexico.

Los Angeles city and county officials created EIDC with the hope that it would act more like a movie company than a government office. Cody Cluff, then head of Los Angeles’ film permit office, was named president.

Industry members said the EIDC, with its quick turnaround, was a welcome change from the bureaucrats who once ran local film offices. The agency charges $450 per permit and smooths the way for film shoots _ arranging street closures, helping with access to public property and negotiating with police and fire officials and even neighbors.

It also seeks to sell industry executives on the benefits of shooting in Los Angeles, often wooing them over expensive dinners and sports events.

``In our business, everything is a day late and a dollar short,″ said Jim McCabe, a veteran location manager. ``Cody Cluff got that and the EIDC got that.″

But that success apparently came with a high price. In a search warrant affidavit signed in September, investigators from the Los Angeles district attorney’s office alleged Cluff spent hundreds of thousands of dollars on lavish dinners and tips, membership in exclusive clubs, donations to his children’s school and payments to an Internet company run by an unnamed board member.

The court papers stated that the EIDC also paid for $500,000 worth of Cluff’s personal expenses, including his membership in a Beverly Hills cigar club and a trip to the Caribbean.

Cluff also authorized almost $200,000 in campaign contributions to state and local politicians and candidates, including nearly 20 members of the agency’s board, records show. A campaign run by Mayor James Hahn, an EIDC board member, to block efforts by some suburban communities to secede from Los Angeles got $10,000.

``It takes money to get your message out,″ Kathleen Milnes, spokeswoman for the agency, said of the donations.

The EIDC’s executive committee voted Cluff out last month, but he refused to step down until this week. He received a $287,000 severance package for salary, fringe benefits and future legal expenses. He has agreed to reimburse the legal fees if he is charged as a result of the investigation and convicted.

Prosecutors are focusing on alleged misuse of public funds by Cluff and the agency, including whether the political contributions were improper.

Cluff, who did not return telephone calls seeking comment, has not been charged and has denied any wrongdoing.

``He wants to assist in investigating everything that’s being questioned,″ said his attorney, Mark Werksman.

It hasn’t always been clear whether the EIDC is a public institution beholden to taxpayers or a private enterprise with the ability to spend extravagantly to impress clients.

EIDC spokeswoman Milnes describes the agency as private, but the agency’s $3 million annual budget comes chiefly from permit fees that would otherwise go to public coffers, and its 45-member board includes the Los Angeles City Council and the county Board of Supervisors.

The EIDC can point to some success _ filming days in Los Angeles increased from around 27,000 a year in 1994 to 47,000 in 2000, according to agency figures.

Filming was down in 2001 because of a post-Sept. 11 drop-off and an oversupply of films stockpiled as a precaution against potential strikes by actors and writers. But this fall, film and TV production began to show a strong resurgence, industry officials said.

``We know filming days are up, and we want them to stay up,″ said Pamm Fair, deputy national executive director of the Screen Actors Guild.

Agency members said Cluff’s resignation would provide an opportunity to restructure and make sure future presidents were not allowed the same latitude as Cluff. Board members have approved an audit of the agency and are seeking recommendations on a new board structure.

In the meantime, the agency is enduring criticism from even its biggest boosters.

``I think the (EIDC) did a very good job encouraging filming in the area,″ said former Mayor Richard Riordan, who helped combine the city and county film agencies into the development corporation. ``They just became arrogant.″

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On the Net:

EIDC: http://www.eidc.com/

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