Housing Plan Is a Blueprint for Frustration : Development: Cost overruns, delays and a lost grant plague the still-unbuilt Hollywood complex. City Council members are blaming the Community Redevelopment Agency.

It was to be a model low-income housing project, one that the city of Los Angeles and municipalities everywhere could look to when trying to build apartments that were not only affordable, but livable as well.

The experimental Franklin-La Brea project in Hollywood, after all, was to be a “case study,” designed by a renowned architect and chosen through a design contest sponsored by the Museum of Contemporary Art.

Four years later, some are saying the project is a model of what not to do when trying to come up with innovative and cost-effective alternatives to existing low-income housing.

In just the last 13 months, according to city documents, the projected cost of building the 40-unit complex has soared from $3.8 million to as much as $5.3 million. Meanwhile, the Community Redevelopment Agency, which is overseeing and funding the project, has lost $750,000 in already-approved federal housing funds because it missed the deadline for getting the project under way.

After firing the first developer it chose for the job for repeatedly failing to meet deadlines, the CRA is negotiating its way out of a contract with a second developer and preparing to start the entire process from scratch with a third.

The agency’s breakup with the second developer, CMGT Construction Co., is occurring because the architect and CMGT could not agree on a final set of designs, in part because the CRA failed, by its own admission, to provide adequate instructions to the developer. To protect itself from a lawsuit, the CRA is paying the developer at least $340,000 to walk away.

As a result, an apartment complex that by now was supposed to be completed and occupied by low- and moderate-income families is still on the drawing board. The site, at the corner of Franklin and La Brea avenues, is a vacant lot. Some city officials, who envisioned the project as a “highly visible . . . gateway” to their vaunted $922-million Hollywood redevelopment project, are blaming the CRA.

“The CRA is incapable of delivering on low-income housing,” said Los Angeles City Councilwoman Gloria Molina after a meeting of the council’s CRA oversight committee, which she chairs. “This is just another example of their ineptness.”

Councilman Zev Yaroslavsky, another member of the oversight committee, joined Molina in excoriating top CRA officials at the Monday hearing. The matter at hand was the CRA’s request for permission to buy its way out of the CMGT contract--which CRA officials said would cost $340,000 and possibly as much as $420,000--and to “take other necessary actions to re-initiate the project with a new developer.”

“We’re damned if we do and damned if we don’t,” Yaroslavsky said of the request to approve the buyout. “It’s just highway robbery of the taxpayers’ money.”

After insisting on better oversight of the project in the future, the committee approved the CRA request and sent the matter to the full council. But before doing so, Molina and Yaroslavsky grilled CRA officials on why they allowed the $750,000 grant from the U.S. Department of Housing and Urban Development to expire, and why they didn’t step in sooner to get rid of the first developer, Metro Housing Construction Co., when the CRA was accusing the firm of repeatedly failing to perform its duties. Metro officials could not be located for comment.

The two committee members also wanted to know why the CRA allowed the project’s price tag to swell by at least $1.5 million.

At the hearing and in interviews, CRA officials defended the project and their role in overseeing it.

John Maguire, deputy CRA administrator for housing services, said there is no easy way to achieve the agency’s lofty goal of creating innovative and aesthetic low-income housing at reasonable cost.

A particularly sticky problem, Maguire said, was trying to take architect Adele Naude Santos’ conceptual renderings of the project and turn them into structures that conform to building and safety codes. Worried that they were going to lose the HUD grant if construction didn’t begin soon, the CRA in desperation hired the second developer in August, 1989, and told the firm to draw up new plans immediately.

CMGT Construction did what the CRA asked, but without adequately consulting the architect, the CRA admits. Santos, now the dean of UC San Diego’s new School of Architecture, was unhappy with the result. So were officials at the Museum of Contemporary Art, who still have an advisory role in the project.

Meanwhile, CRA officials lost the HUD grant. Maguire said his agency had been told by HUD officials that the deadline would be extended. He said such an agreement was never put into writing, and that he did not remember who at HUD made the a promise. Scott Reed, a HUD spokesman in Los Angeles, insisted in an interview Thursday that the federal agency, which approved the grant in 1986, would “never make a statement to the CRA that they did not have to meet a certain deadline.”

“In this case, the CRA was given at least four and possibly five chances to perform, and since they didn’t, the money was recaptured,” Reed said. The CRA last year appealed the decision to HUD headquarters in Washington, but Reed said their appeal was rejected.

Faced with a project that was becoming much more expensive than they had planned, and which they determined did not meet their objectives--or the museum’s--CRA officials decided to get rid of the second developer and seek a third developer to redesign the project.

Councilman Michael Woo, who represents Hollywood, agreed. In an interview, Woo said he had already invested too much political capital in the project (neighbors have been vehemently opposed, saying it will exacerbate traffic and congestion problems), to let it die.

CRA officials say they hope to make up for the loss of the HUD grant by forcing the new developer to shave $800,000 off the current $5.3-million cost estimate.

The officials say they still believe that they can achieve Santos’ original vision of creating a complex with open spaces, terraced courtyards, private entries and other amenities. Such a project, CRA principal architect John Kaliski said, will allow tenants to live with a level of dignity and interaction usually lacking in subsidized complexes.

MOCA Director Richard Koshalek said the museum remains enthusiastic about the project, even with all of the costs and difficulties.

“If we do this,” Koshalek said, “we will set an example for the United States and even Europe . . . in providing a quality environment in the realm of low-income housing, something this city and others desperately need.”

Some elected city officials warned, however, that the CRA has been given its last chance.

“If it happens again, we junk the project,” Yaroslavsky said. “Innovation may be a victim of this if you can’t do it right the next time, and that would be a tragedy.”