Agency to Aid Poor Communities Proposed : Riots: State Senate panel that studied causes of city’s civil uprising urges creation of Economic Development Financing Authority with power to issue bonds.

A special state Senate committee that investigated conditions underlying the Los Angeles riots recommends establishing a statewide Economic Development Financing Authority to issue bonds and facilitate development activities in the city’s impoverished communities, according to a report scheduled for release today.

The committee also urges strengthening state rules on insurance redlining, enacting a community reinvestment act for state chartered financial institutions, increasing access to child care, modifying local zoning laws to help stimulate growth and authorizing community-based control of the location of liquor stores.

The report, the product of several public hearings, lays the foundation for a dozen legislative proposals that the committee says will take two years to enact. It criticizes the Legislature and Gov. Pete Wilson for failing to pass measures to assist residents of riot-torn areas.

The panel, co-chaired by Democratic state Sens. Art Torres and Diane Watson, both of Los Angeles, also calls for the creation of a multicultural education and research organization in Los Angeles County to unify divided communities and build consensus on public issues.

Torres said several local university presidents have expressed interest in housing such a center on their campuses and hopes the center could be launched in the near future with foundation funding. Torres said such a center could facilitate “coalition building” that could be an effective tool in making the other recommendations come to fruition.

“The most important thing that transcends all the proposals is that there needs to be communication among all the communities in Los Angeles,” Torres said in an interview. “Los Angeles has become a diversity gridlock. We need to break that.”

The panel’s 60-page report, provided to The Times on Tuesday, says the spring unrest, which led to 53 deaths and nearly $1 billion of property destruction, “was rooted in long-festering resentments, economic deprivation, poor police/community relations and triggered by a crowning act”--the not guilty verdicts in the trial of four Los Angeles police officers accused of beating motorist Rodney G. King.

The report states that similarities between this year’s civil disturbances and the 1965 Watts riots “were pronounced and troubling.” The report also acknowledges, however, that Los Angeles is a consider ably more complex and diverse city than it was in 1965.

“Whites who represented more than 70% of the county’s residents at the time of the 1965 riots, today are just 40% of the county population of nearly 9 million,” the report notes. “Since 1960, the portion of Latino population has quadrupled to 38%. The portion of Asian-American at 10.5% has quintupled.”

This is the second major report on the riots by a state legislative body, following by two months a study issued by a special Assembly committee chaired by Curtis Tucker Jr. (D-Inglewood). Some of the Senate panel’s recommendations parallel those made by the Assembly Committee but others differ.

For example, the Assembly report called for the creation of a Los Angeles Revitalization Zone Development Authority, which would essentially replace the city’s Community Redevelopment Agency, which has been criticized by many neighborhood activists for bulldozing affordable housing in favor of high-rise development downtown.

Torres said he believes that any decision about the CRA is “a local issue,” although he said the entire state redevelopment law should be re-examined “because of abuses in communities throughout the state.”

He also said that he and Tucker have worked closely and said he anticipated that they would work jointly on proposals in the next session of the Legislature.

The creation of an Economic Development Financing Authority and changes in regulations that would increase the availability of insurance in depressed communities are major points of emphasis in the report.

The panel would be authorized to issue revenue bonds, to issue general obligation bonds approved by the public and to be the repository of other funds to be used for public and private sector economic development activities.

Torres said the authority would be structured to facilitate the active and voluntary participation of large pension funds in the authority’s development projects. The veteran East Los Angeles legislator said the agency’s funding could be established by selling bonds.

“I think the corporate sector views this as a responsible alternative,” Torres said. “It ties into known mechanisms of financing; it’s not reinventing the wheel.”

State Corporations Commissioner Thomas Sayles, who is Gov. Wilson’s point man on post-riot programs, said the proposal “merits consideration.” But he said he would have to study it in detail before giving a definitive opinion.

The report makes five major recommendations relating to access to insurance, including beefing up the FAIR plan, commonly known as “the insurer of last resort” for the inner city.

Deputy Mayor Linda Griego applauded those proposals. She said many small business owners in the city’s economically troubled communities simply could not afford insurance at current rates. “Really zeroing in on the cost of insurance is very important,” she said.

The Senate panel also issues a challenge to Rebuild L.A., the special post-riot revitalization organization created by Mayor Tom Bradley, to set aside a portion of the funds it collects from corporations and foundations “to directly support established community-based organizations.”

Rebuild L.A. spokesman Fred MacFarlane said the group has already linked executives from several companies with community organizations that needed assistance--including L.A. Renaissance and Rebuild Crenshaw. “We have urged companies to focus on community-based organizations as they make commitments to the inner city,” MacFarlane said.

Recommendations for a New L.A.

Among the key recommendations of the Senate Special Task Force on a New Los Angeles:

Establish a statewide Economic Development Financing Authority to issue bonds and facilitate economic development activities.

Enact a Community Reinvestment Act for state-chartered institutions.

Create an Urban Progress Program for young people in Los Angeles.

Reintroduce comprehensive police-conduct legislation.

Strengthen Department of Insurance rules on redlining in inner cities.

Create a statewide Office of Immigrant Affairs.

Expand the state program that provides insurance for people who otherwise could not afford it.