A state auditor this month said the Hollywood Stuntmen's Hall of Fame appears to be using state funds granted for development of the facility the way they were intended to be used, but the city needs to formalize its contract with the museum immediately.

Auditor Sandra L. Naegle, with state Community and Economic Development Department's Office of Budget and Accounting, examined records of the museum and other projects last month.She notified the city Dec. 9 that records of all agencies receiving federal funds allocated by the state Permanent Community Impact Board for local development are in compliance with grant contracts.

Naegle noted, however, that the year-old contract between the city and John Hagner, founder-director of the Stuntmen's Hall of Fame, had yet to be signed.

"I strongly recommend that the relationship be formalized immediately," she wrote.

City officials this week set a 40-day deadline to remove obstacles causing delays with the contract.

The city is administrator of $212,640 in mineral lease funds and $10,000 in Community Development Block Grant funds the CIB awarded for first-year development and operations of the museum, including purchase of an old church to house Hagner and his extensive collection of stunt-men-related memorabilia and movie industry artifacts.

About $20,500 remained in accounts for the museum at the time of the audit, according to Naegle's report.

Naegle also asked the city to clarify its use of interest earned from a grant for the community golf course expansion project. She said earned interest must be applied to the proj-ect or returned to the CIB.

The stunt men's museum and addition of nine holes to the golf course were two of four projects that began receiving funding this year of more than $1.2 million in CIB grants.

A fifth project, a golf course study, was funded in 1985.

Mayor Tom Stocks said the audit Nov. 9 and 10 surprised him but he had been confident of its positive outcome.

Naegle examined records and reviewed contract performance, reporting that she found nothing to conclude that the agencies visited were not in compliance with CIB grant contracts.

She also commented that the expanded golf course "is a beautiful course and should be an excellent asset for the city."

"I noted a great deal of donated labor and machine hours and would like to commend the city and its citizens for the united effort," Naegle wrote.

About $78,200 remains out of $750,000 awarded for the golf course work, the report said.

Another $16,400 remains out of $176,400 awarded for purchase and survey of 161 acres of federal land for development of private lodging and other facilities related to the golf course.

The audit was followed mid-December by receipt of about $72,800 from the CIB for the next phase of construction of sidewalks, storm drainage and sidewalk access ramps. The sidewalk project was awarded just over $372,800.

The remaining balance of nearly $8,000 was also received this month for reimbursement on the planning study for the golf course expansion. That study was funded in 1985 with a $36,000 grant.

About $700 was received for work on an updated master plan for the city.

Stocks said in a letter addressed to Naegle in acknowledgment of the audit that he believes the return on investment in the projects has far exceeded expectations.

"I'm sure you will agree that there has been extra work, meticulous attention, and a concerted effort to make a success of all these projects," he wrote.