Hollywood Redevelopment Funding Delayed by Appeal of Residents’ Suit
After a last-ditch scramble to raise funds for legal costs, a group of Hollywood residents filed a motion Tuesday in Superior Court to appeal an unsuccessful lawsuit against the community’s $922-million redevelopment plan--a move that further delays financing for the ambitious project.
The appeal by the group--Save Hollywood Our Town--seeks to overturn the plan adopted in 1986 for restoring the 1,100-acre core of Hollywood, an area of 35,000 residents that also contains Mann’s Chinese Theater, the Sunset-Gower Studios and many of the film capital’s most historic buildings.
The opponents have charged that the city-approved redevelopment plan was illegally written in a way that favors big business interests over those of small businesses and homeowners.
Filed hours before a court deadline, the appeal creates an immediate financial impact on the project, keeping frozen more than $2 million in property tax funds earmarked for Hollywood. The money has been piling up for two years while the case has been tied up in court. A ruling in April upheld the plan, which would have freed the funds if no appeal had been filed.
Now, the continually growing pool of money will remain in a bank account held jointly by the county and the Los Angeles Community Redevelopment Agency. Under an agreement between the two agencies, none of the money will be released to the CRA until the case is finally settled, perhaps in a year or two. By that time, the funds in the account could easily double to $4 million or more, officials said.
“In the absence of those dollars, the agency has been required to borrow money from the Community Development Department of the city of Los Angeles . . . and we’ve also borrowed from other redevelopment (accounts),” said H. Cooke Sunoo, the CRA’s Hollywood project manager.
So far, the Hollywood project has borrowed $4.2 million from the city Community Development Department and $5.1 million from the CRA’s own contingency accounts, enabling it to continue crucial planning studies and to pay legal fees resulting from the lawsuit.
The project will enter the new fiscal year in July with about $900,000 left over, meaning that it will have to borrow again from the city and CRA reserves to meet its proposed 1989-90 budget of $9.2 million, said Peirre Lorenger, the agency’s deputy administrator of finance.
‘Will Be a Hardship’
“It will be a hardship,” Lorenger said of the property tax freeze. But whether it slows future development in Hollywood is not yet certain, he said.
As part of next year’s budget, the Hollywood project is expected to receive $2 million in Bunker Hill redevelopment funds for the construction of low- and moderate-income housing. Remaining money will be spent mostly to repay loans and to continue the many planning studies necessary to set the groundwork for construction, Lorenger said.
In the future, the CRA also expects to begin providing financial assistance for major hotels, office projects or housing developments. The inability to acquire property tax funding means that the agency also cannot float development bonds, a practice that allows the agency to borrow the money ahead of time for such projects. That handicap might, or might not, be important, Sunoo said.
“We expect we’ll be able to keep the project going,” he said. “(But) it’s a little difficult to predict at this point how (individual) projects might be affected.”
Bill Welsh, who fought to shape the redevelopment plan as president of the Hollywood Chamber of Commerce, expressed disappointment that an appeal is being filed. But he predicted that developers will continue efforts to rebuild Hollywood even with the project’s future still in doubt.
“I’m sorry that it has happened,” Welsh said. “(But) all it does is delay the inevitable--a redevelopment project with which Hollywood will be very proud.”
The appeal would challenge the CRA’s close relationship with the Chamber of Commerce and its legal findings that Hollywood is a blighted commercial area in need of public financial assistance to right itself, said Dale Gronemeier, an attorney for residents challenging the redevelopment plan.
Chamber Raises $150,000
Chamber members raised $150,000 to help bring redevelopment into Hollywood, and chamber members at one time occupied more than half the seats on the 25-member Project Area Committee, a citizens group that helped to shape the plan.
Welsh defended the chamber’s role, however, saying chamber members never voted as a bloc during the many months the plan was taking shape.
Homeowners spokesman Brian Moore called the appeal a “last chance” to save Hollywood from excessive development. He said the continuing freeze on redevelopment funds might at least force CRA officials and developers to scale down the size of new hotels and commercial complexes.
“We’ve dug our heels in,” he said.
Residents rushed to meet a 60-day deadline for initiating the appeal. Gronemeier, whose Pasadena firm handled the original case, said small business and property owners on Hollywood Boulevard and elsewhere contributed much of the necessary money and pledges.
He said the appeal is expected to cost about $100,000.
