Another Challenge Arises for Control of L.A. Redevelopment
The City of Los Angeles is once again considering a reorganization of its redevelopment functions that would dismantle the once-powerful Community Redevelopment Agency and place it under the control of the City Council. But some council members are still balking at the idea of taking over the CRA themselves.
At a meeting in early February, the council ordered city officials to move forward with the reorganization plan, which would give the council direct control over redevelopment functions and create a new Community Development Commission to advise the council. The proposal would create a new Economic Development Department to handle all of the city's economic development-related activities and place the city Housing Department in charge of the CRA's housing activities. The implementation plan will be drawn up by Ronald Deaton, the city's chief legislative analyst.
"This is closer than we've ever gotten before," said Councilman Mark Ridley-Thomas, an advocate of the reorganization whose district covers most of South-Central Los Angeles. Ridley-Thomas and other advocates say Los Angeles has not been competitive in economic development because of a sprawling and inefficient bureaucracy that encompasses several departments, including the CRA.
Some council members oppose a CRA takeover, saying they already have enough to do. Mayor Richard Riordan supports a reorganizations in concept but has called for more study.
The proposed reorganization is important because the CRA has traditionally been the most powerful and autonomous redevelopment agency in the state. Unlike almost all other cities in the state, in Los Angeles the City Council does not double as the redevelopment agency board. Rather, the CRA board is appointed by Los Angeles's mayor, who has traditionally exerted considerable control over the agency. During the administration of Mayor Tom Bradley, who left office in 1993, the redevelopment agency focused on downtown redevelopment projects and was rich with incremental property tax revenues.
However, the redevelopment reform bill of 1993 — along with declining property values and a CRA-financed bailout of the Los Angeles city budget during the recession — have turned the agency's once-abundant surplus into a deficit.
The agency's annual tax-increment flow has dropped from $130 million in the early 1990s to only $80 million today, according to CRA officials,. As a result, the CRA currently faces a $40 million shortfall over the next five years. Recent high-profile projects — such as the Staples Center arena in downtown L.A. and a major retail/entertainment complex in Hollywood — "have not been funded out of traditional CRA revenue sources," said health-care entrepreneur Keith Richmond, a CRA commissioner appointed by Riordan.
The Staples Arena, which will be home to the Lakers and Clippers basketball teams and the Kings hockey team, was financed largely with private funds, though this city did contribute $70 million in up-front financing. The city's contribution to the Hollywood project, which will include the new venue for the Academy Award ceremonies, will be paid back largely out of incremental sales-tax revenues from the project's retail component.
Indeed, the CRA appears little involved in the highest-profile redevelopment project currently pending in the city — the proposal to renovate the Los Angeles Coliseum for a new National Football League team. Rather, the stadium will be financed largely with private funds raised by developer Ed Roski, who also served as developer of the Staples Center. Heavy-hitting Los Angeles fundraiser Eli Broad was recently added to the Coliseum team to try to "close the deal" with the NFL. The Coliseum is owned and operated jointly by the City of Los Angeles, L.A. County, and the state government.
CRA reorganization proposals have been floating around ever since the Los Angeles riots of 1992, which undermined the credibility of Mayor Bradley's downtown-oriented redevelopment approach.
In recent years, the CRA has created several new project areas in the San Fernando Valley and South Central, both of which were hit hard by the 1994 Northridge earthquake. Also, in the wake of the riots, many City Council members demanded a more targeted, team-oriented approach to neighborhood revitalization.
In response four city departments — planning, housing, community development, and the CRA — put forth a plan to work together at the neighborhood level. But critics such as Ridley-Thomas say the coordinated effort has not worked well enough. "It takes too long to get a project done," Ridley-Thomas said in an interview.
The proposal tentatively approved by the council includes four components:
First, it calls for a direct council takeover of the CRA's functions, thus abolishing the separate CRA board appointed by the mayor. The city must declare either the council or another body as the redevelopment agency in order to take advantage of the provisions of the redevelopment law.
Second, the city's proposal calls for the creation of an advisory body, called the Community Development Commission, to oversee economic development functions and make recommendations to the council on economic development matters.
Third, the proposal calls for the creation of a new Economic Development Department that consolidates all economic development functions. These functions include not just the CRA, but also activities of the L.A. Community Development Bank and the administration of such state and federal programs as Economic Development Administration grants, block grants, and enterprise and empowerment zones.
Fourth, the proposal calls for the transfer of all CRA housing functions to the city Housing Department. Because CRA has traditionally allocated more than the required 20% revenue "setaside" for housing, it is one of the most important sources of revenue for low- and moderate-income housing development in the entire city.
Several longtime council members oppose direct council takeover of CRA functions. On the Los Angeles public radio program "Which Way L.A.," Councilman Nate Holden said he believed that Ridley-Thomas and other simply wanted to use the CRA to promote "pet projects." Other council members say they don't want the city's economic development effort to be burdened by the CRA's financial problems.
Mayor Riordan has remained silent on the specifics of the reorganization while supporting it in concept. During his six years as mayor he has sought to coordinate economic development efforts from his office. But he has placed emphasis on fast-track permitting and broad-based assistance to the business community rather than targeted redevelopment efforts in distressed neighborhoods. These efforts — known as "L.A.'s Business Team" — would be unaffected by the economic development reorganization, at least at first, according to the plan being devised by Deaton's office.
John Molloy, Administrator, L.A. CRA, (213) 977-1600.
Mark Ridley-Thomas, Councilmember, L.A. City Council, (213) 485-7616.
Ronald Deaton, Chief Legislative Analyst, City of Los Angeles, (213) 485-6622.