D.C. Auditor Otis H. Troupe issued a formal apology yesterday to developer Jeffrey N. Cohen and said certain conclusions "were in error" in a scathing auditor's report that charged that the city's investment might be at risk in a $12.5 million Shaw land deal involving Cohen.
Troupe apologized and formally revoked his report one day after real estate documents and interviews with lenders showed that liens against the property had been paid off, contradicting the key allegation in Troupe's report that as of last month $6.8 million in old liens remained unpaid.
Troupe had charged in the report that the city's "failure to require discharge of all liens against its property at settlement Feb. 1, 1985, suggests that the District deliberately intended to provide indirect funding to a close friend and political ally of the mayor [Cohen] . . . . "
Yesterday, in a letter to Cohen's attorney, Troupe wrote, "The subsequent information . . . clearly establishes that the liens were released in timely fashion, that the window of risk that I perceived did not exist and that your client is blameless in this matter."
Cohen said later, "I'm glad he apologized and I accept it. It was a commendable statement. However, it does not excuse the actions he took in preparing the report and releasing it without properly investigating."
Cohen did not rule out legal action against Troupe. Cohen's attorney Barry Levine criticized the report's suggestions of "foul play or favoritism," saying that such conclusions "politicize the auditor's office. The role of the auditor is to report facts."
While Troupe stressed that Cohen was "blameless," he renewed his charge that Mayor Marion Barry and Curtis McClinton Jr., the deputy mayor for economic development, had failed to provide information that would have contradicted the inaccurate findings, even after seeing copies of the report on Sept. 5, three days before it was issued publicly.
In a letter to Council member Frank A. Smith (D-Ward 1), who had requested the audit, Troupe said Barry's actions violated the city charter, which asserts that the auditor should have access to "all books, accounts, records" necessary for an audit.
Barry's press secretary said that reporters seeking comment should "call Mr. McClinton. He's the one in charge of the project."
McClinton asserted that his office responded on Sept. 5 to a voluminous set of questions received from Troupe June 14. "He chose not to wait on valid and complete documentation forwarded to his office and chose to go forward with a sloppy, inaccurate report," McClinton said.
Told that Troupe found McClinton's answers "evasive," McClinton said, "There's an old African proverb: When you can't dance, blame the drum."
The Shaw land deal has been the subject of controversy since it was revealed last February that the city closed the deal without first conducting its own appraisal of the six properties, which were purchased for $11 million from a partnership controlled by Cohen. Instead, the city relied on an appraisal prepared in 1984 for Cohen's partnership by a private real estate appraiser.
Yesterday, the city's Department of Administrative Services announced that a private appraiser had been hired under a $20,000 contract to appraise the property within the next 60 days. McClinton said the city went outside government to speed the process because city appraisers have a "tremendous backlog."
McClinton said he had followed "all the procedures that are customary" by "initiating an outside appraisal prior to closing" the deal. However, that appraisal was not done before the deal was completed.
Council member Smith said yesterday he still had "questions about the lack of a [city] appraiser. I am not for one momemt accepting that practice. It violates reason and good sense. It is something D.C. should not repeat."
The city, in an effort to spur development in the rundown Shaw neighborhood, arranged for a consortium of banks to pay $11 million for the property. In February 1986, the District will be required to pay off the loan, plus interest expected to be $1.5 million. Meanwhile, Cohen and a nonprofit community group are to develop the properties.