Vote on Quake Redevelopment Delayed : Rebuilding: Council delays decision after residents denounce plan to use CRA powers to renovate shattered areas.

Following nearly three hours of mostly angry public testimony, the Los Angeles City Council delayed a decision Tuesday to use redevelopment powers to rebuild earthquake-damaged neighborhoods in Sherman Oaks and Studio City.

The redevelopment project was the first of six projects to be considered for hard-hit areas in the San Fernando Valley and Hollywood. But the opposition raised Tuesday signals an uphill battle for the other projects.

As proposed, a redevelopment zone in Sherman Oaks and Studio City would include commercial and residential blocks along Ventura Boulevard and in adjacent neighborhoods. It would divert property taxes to provide residential and commercial loans and money to rebuild streets and public buildings.

But residents urged city officials to reject the plan, saying they do not trust the city’s Community Redevelopment Agency to spend their tax dollars and to wield the right to condemn private property.

“It’s clear to the people who have looked into this that the CRA is not the way to go for Sherman Oaks,” said Lynn Solky, a resident and business owner in Sherman Oaks.

Facing strong sentiments on both sides, Councilman Zev Yaroslavsky, who represents the area, suggested that the city could tentatively establish the redevelopment project but delay for about 10 months the sale of bonds to raise funds, giving the council time to back out of the plan in the future.

A CRA attorney said he was unsure if state law would allow the city to delay the sale of bonds but said he would study the idea further and return with an answer when the council reconsiders the proposal Tuesday.

Meanwhile, the council is scheduled today to consider establishing an emergency redevelopment zone in the northeast Valley communities of Mission Hills, Pacoima and Sylmar.

The biggest redevelopment area is proposed around the epicenter of the earthquake, in Northridge, Chatsworth, North Hills and Granada Hills. In another signal that support for the redevelopment zones is shaky, Councilman Hal Bernson, who represents the area, said he still has many questions about the plan.

“I’m still not sold completely on it,” he said. “It’s not going to be an easy road regardless of how we go.”

The proposal for redevelopment zones takes advantage of emergency provisions of the state’s redevelopment law that allow local agencies to establish project areas in disaster zones without completing the time-consuming environmental studies required when traditional redevelopment areas are established.

The law allows the agencies to keep all the property tax generated by new construction in a project area and use that money to pay for improvements such as new streets, parks and sewers, as well as loans for quake victims.

Within the proposed boundaries of the redevelopment area, about 700 residential buildings comprising 10,000 dwelling units and more than 200 businesses suffered damaged, according to CRA officials.

The 900-acre project would generate $18.8 million, which would be offered to home and business owners in the form of low-interest loans. However, the redevelopment guidelines require that 20% of the housing funds be set aside for tenants with moderate or low incomes.

Once established, the CRA and the council would have limited powers to condemn abandoned and blighted property--a provision that makes many property owners nervous. Some homeowners suggested the city form a committee of residents and give it authority on how the project is managed.

“Residents have to have some say to keep the CRA from running over the citizens,” said Gordon Murley, head of the Federation of Hillside and Canyon Assns.

Many opponents cited a 1993-94 Los Angeles County Grand Jury report that criticized the CRA’s management practices and excessive overhead costs. The CRA has also encountered problems in North Hollywood where one manager received death threats and the agency has experienced financial difficulties.

Members of the council said their vote on whether to support a zone in Sherman Oaks would rest heavily on Yaroslavsky’s decision.

Yaroslavsky said he believes the redevelopment plan is a good way to help quake victims. But he said he was hard-pressed to make a decision because he leaves office Dec. 5 to take a seat on the Los Angeles County Board of Supervisors and would not be in office to see the project through.

“There is no decision that I can make that won’t subject me to criticism,” he said.

He rejected suggestions by some of his council colleagues that he is simply unwilling to take a stand on a controversial subject. He said he is trying to find a solution that will appeal to opponents and supporters of the plan.

The redevelopment proposal was backed by the Sherman Oaks Chamber of Commerce and other business owners who said it is needed to rebuild the community’s commercial base.

“This is the only plan I can see that can help those who are still left out there,” said Nancy Schmidt, president of the chamber.

But most of the speakers at the hearing said they opposed the idea primarily because of the CRA’s checkered history in managing redevelopment projects in Hollywood, North Hollywood and Downtown Los Angeles.

Councilman Joel Wachs called criticism of the CRA a “scathing indictment of the agency” that “calls into question the viability of the agency in the history of the city.”

Yaroslavsky agreed that the CRA’s reputation has made it difficult to sell the idea to the public. “This agency has such a sad credibility problem that it makes it impossible to rationally deal with this,” he said.

Proposed Redevelopment Area The Community Redevelopment Agency wants to create a 900-acre redevelopment zone in Sherman Oaks, one of the hardest-hit areas in the quake. A portion of local property taxes will be diverted to pay for reconstruction, new construction fand public improvements. Source: Community Redevelopment Agency