L.A. council won’t absorb redevelopment agency

Fearing a new financial burden in a budget crisis, the Los Angeles City Council on Wednesday jettisoned its once-vaunted redevelopment agency, an entity that spent decades revitalizing downtown, Hollywood and other areas of the city.

On a 9-3 vote, the council decided that it could not afford to take on the agency and its 192 employees as California’s long era of redevelopment comes to a close.

A new state law will eliminate 400 redevelopment agencies and shift billions of dollars in tax revenue to state, city and county agencies. Council members had until Friday to decide whether they would shoulder responsibility for completing hundreds of millions of dollars in agency projects.

The council action means some other, as yet unknown, government body would have to step in. Minutes after the council vote, a majority of the Los Angeles County Board of Supervisors told The Times that they don’t want the redevelopment agency’s employees or obligations.

“The liabilities associated with redevelopment in the city of Los Angeles are just too big for the county to absorb,” said Supervisor Mark Ridley-Thomas, a former Los Angeles city councilman.

The council’s decision takes effect Feb. 1, unless the state Legislature approves a postponement of its law.

Wednesday’s vote came one day after City Administrative Officer Miguel Santana warned that the city could face more than $109 million in costs if it took on redevelopment activities. Council President Herb Wesson said the city should lobby Sacramento for legislation that would make it practical for the city to continue redevelopment agency operations. At this point, he said, the city cannot afford such a financial gamble.

“The reality of the situation is the [agency] as we know it is dead,” he said. “And I think it’s time for us to take it off of the machine.”

The council still must decide by the end of the month whether Los Angeles should take on various housing programs run by the redevelopment agency. If lawmakers opt out, responsibility for those programs would fall to the quasi-independent city Housing Authority, which is overseen by seven appointees of Mayor Antonio Villaraigosa.

Union officials, affordable housing advocates and lobbyists opposed the council’s action, with councilmen Eric Garcetti, Ed Reyes and Richard Alarcon voting no. Garcetti argued that the potential cost to the city was closer to $30 million and said the council should have had more time to review Santana’s analysis, which was released Tuesday afternoon.

“It is difficult to make these decisions in 24 hours,” he said.

For more than half a century, cities have used redevelopment to assemble land and help developers bring new projects to those sites. To fuel those activities, billions of dollars in property taxes have been diverted from other services, such as schools and public safety.

In Los Angeles, dozens of redevelopment projects are now in question, including new housing in downtown, Little Tokyo, Boyle Heights, Hollywood, Reseda and South Los Angeles. Also in jeopardy are planned parks, street repairs and renovation of a 13-story office building in Panorama City, redevelopment officials said.

If no local government shows interest in the redevelopment agency, oversight could fall to an authority headed by three appointees of Gov. Jerry Brown, who pushed to kill redevelopment. That possibility dismayed lobbyists for real estate interests, who warned council members that they could be sued over development deals that may now fall apart.

“The litigation risks remain very heavy for the city if it walks away from these projects,” warned lobbyist Shiraz Tangri.

County Supervisor Zev Yaroslavsky, who has criticized what he described as abuses in redevelopment spending, offered a different view this week. During a luncheon speech attended by lawyers representing redevelopment interests, Yaroslavsky said that it was “only a matter of time” before redevelopment activities prompted a backlash.

“You had a good thing going for a long time,” he said, “and you got greedy.”

david.zahniser@latimes.com