Redevelopment Project OKd by Council Panel : Urban renewal: Committee approves Promenade plan but orders CRA to negotiate with developer to reduce tax subsidies.

A City Council committee has approved a controversial agreement for a huge multiuse project considered to be the cornerstone in the Hollywood redevelopment effort, but also ordered that subsidies from the city be substantially reduced.

The council’s Community Redevelopment and Housing Committee, by a unanimous 3-0 vote, sent to the full council last week a tentative proposal in which the city would give developer Melvin Simon & Associates an unspecified amount of public subsidies to build his planned $300-million Hollywood Promenade project.

The committee also ordered the city’s Community Redevelopment Agency to begin renegotiating with Simon with the intention of substantially reducing the amount of taxpayer money needed for the project. The original CRA proposal called for the city to give the developer as much as $48 million.

The CRA has 90 days to bring the proposal to the full council. Council approval would set guidelines and restrictions--including a cap on city spending--under which the city and Simon would then settle the details. Those details, shaped into a formal project agreement, would have to be ratified by the full council in a second vote. City officials hope the project--part of its $922-million Hollywood redevelopment effort--will anchor a major intersection at the corner of Hollywood Boulevard and Highland Avenue and spur other economic growth.

The Promenade project would create more than 1 million square feet to house museums, offices, retail shops, movie theaters and a hotel, all wrapped around the famous Mann’s Chinese Theatre.

After the vote, Simon maintained that it needs the $48 million in city money in order to obtain financing for the project as it stands now. The recession has made it impossible to get financial backing for such a large project, especially because of the perception among lenders that Hollywood is a blighted area, company Vice President Michael Marr said.

But Marr said his company and the CRA hope to reduce the cost of the overall project, especially plans to build 3,400 underground parking spaces, to ease the financial burden on the CRA and the city.

Marr praised the committee for allowing Simon and the city to renegotiate the project without restrictions. “They gave great latitude to us and the CRA to reduce the cost of the project,” Marr said. “So I’m very pleased with the results.”

City Councilman Michael Woo, a committee member and the council’s Hollywood representative, hailed the vote as some of the best news to hit the faded movie capital in the six years since the renewal effort got under way.

“Finally, after a long time, we’re shaking off the naysayers, we’re shaking off the bureaucrats who can’t say yes, we’re shaking off all of the pessimists who said there is no hope for Hollywood, and we’re moving ahead,” Woo said in a luncheon speech Wednesday to the Hollywood Chamber of Commerce. “Finally, I can see the clear road ahead of us to restore Hollywood to the glamour and glory that Hollywood richly deserves.”

Despite Woo’s optimism, the project still faces stiff opposition from at least one committee member, Zev Yaroslavsky. Yaroslavsky said earlier this week that with the city’s current budget crunch, it was “absolutely unthinkable” that the council would even consider spending $48 million to help Simon develop his profit-making venture. He said he didn’t know “any politician who would want to be associated with it.”

Yaroslavsky said he voted yes on the proposal in committee only after the panel took out any pledge of taxpayer money. “If they come back with any substantial taxpayer participation,” he said, “ I will oppose it and strongly recommend that others oppose it.”

“This (project) is a very difficult challenge and all of us want to help” Woo get it going, Yaroslavsky said. “The only issue is to what extent people’s taxes should be used to underwrite private profit-making developers.”

Gearing up for the battle to get the project approved, Woo urged the nearly 100 chamber members to lobby the City Council to keep the project alive.

“We’ve got to get the message out to every member of the City Council--that we expect them to stand with Hollywood, not against Hollywood in the historic struggle to bring it back to a state of revitalization,” Woo said. “It’s about time the city government, and about time the members of the City Council recognize that if Hollywood goes down, Los Angeles goes down.”