Delays, Lack of Focus Dogged L.A.’s Grant Bid : Aid: Plan for federal funds was long on philosophy, short on specifics, memos show. Complacency is also cited.

The signs of trouble were there from the very start as the first drafts of Los Angeles’ bid for the largest federal urban renewal program in decades began circulating around City Hall.

One internal memo written by a project consultant complained about a lack of clarity and an abundance of “buzz words.”

Another unsigned critique in the city files warned: “Plan has no focus. . . . There is still no real strategy.”

Months and many revisions later, Clinton Administration officials said they reached much the same conclusion about the two-inch-thick tome, dubbed “Building Together From the Ground Up,” seeking the empowerment zone designation, which would have been worth $300 million to $600 million per year. It was simply too vague and failed to explain how private businesses, the state and local agencies would work together to produce tangible improvements in impoverished neighborhoods.

As a result, federal officials insisted last week, they had little choice but to pass over Los Angeles in an intense competition for six so-called empowerment zones--coveted programs designed to pump millions of dollars in federal aid and business tax breaks into designated communities.

It was a particularly stunning loss for Los Angeles, because the empowerment zones were approved by Washington largely as a response to the city’s 1992 riots.

“We had everything going for us,” said a perplexed Zev Yaroslavsky, the former Los Angeles councilman recently elected to the County Board of Supervisors. “Somewhere, we gave up the ball.”

President Clinton sought to soften the blow with a sizable concession prize of federal aid--and a promise to ask Congress to extend full empowerment zone benefits to Los Angeles. And Mayor Richard Riordan fumed that Washington’s bias for Eastern cities sabotaged the city’s effort.

But through the public relations posturing, the harsh fact remained: Los Angeles, widely viewed as a sure bet, had failed to win a sorely needed infusion of business development incentives and social programs.

“(Los Angeles) really has to take responsibility for its own ineptness,” said one federal official knowledgeable about the decision to exclude the city. “L.A. was the sentimental favorite, (but) they didn’t put together a good proposal.”

As the critical internal City Hall memos suggest, Los Angeles’ pursuit of an empowerment zone was more troubled than most officials imagined, or at least publicly acknowledged.

Indeed, records and interviews indicate that Los Angeles’ effort was hobbled by a number of problems: overconfidence among officials here and in Washington; time-consuming turf battles over the program’s spoils; scattered and shifting City Hall leadership on the project and just plain terrible timing--the Northridge earthquake hit just as the application period opened.

Councilman Mike Hernandez, who heads a committee that worked on the city’s bid, complained that federal officials had assured Los Angeles it was virtually a certain winner. “They said that as long as our name was on a paper we would get it,” he said.

In hindsight, several officials said privately, Los Angeles erred in believing that it was a shoo-in, and that heavy lobbying and the bid document were not crucial. “We thought we were in the arms of everybody,” said one city representative involved in the process.

The complacency extended to Washington, congressional sources said. California’s delegation failed to mount a coordinated effort in support of the city’s application, according to representatives and staffers on Capitol Hill. “Everybody thought it was a slam-dunk,” said a top aide to a veteran California lawmaker, who spoke on the condition of anonymity.

It was a key tactical error because the city was at a disadvantage in several critical ways, congressional sources said. Limitations in the empowerment zone law made it virtually impossible to grant all three of the nation’s largest cities--New York, Los Angeles and Chicago--the full program benefits.

And two of the leading champions of empowerment zones in Congress were key Democrats on the Ways and Means Committee--Chicago Rep. Dan Rostenkowski and New York Rep. Charles B. Rangel.

“We had nobody who stood out on the right committees,” said a Washington source familiar with Los Angeles’ effort.

Others speculated that the Clinton Administration, in the aftermath of massive earthquake aid, may have felt that it had already given Los Angeles enough.

Just how much politics may have influenced the selections is difficult to judge, at least based on the Clinton Administration summaries of the competing proposals that won zone programs.

Many showed similar philosophies. Like Los Angeles, Chicago said its two most important goals were “alleviating poverty” and “reinventing government.” Greg Longhini, a Chicago spokesman, said his city’s bid--very much like Los Angeles’--avoided commitments to specific revitalization projects.

Although the proposal included letters from businesses indicating that 1,500 new employees could be hired in the zones quickly under the federal tax credits, Longhini acknowledged that the jobs were far from assured. “They’re basically letters of good intent (from) businesses that hopefully would take advantage” of the program, he said.

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Some winners--notably Detroit, Baltimore and Atlanta--appeared to offer more specific plans. And both Chicago and New York--Los Angeles’ principal competitors--said they could tap more private sector money than Los Angeles. Chicago said private industry--mostly banks--had pledged to make a $1-billion investment in the zone, mainly to finance affordable housing. New York pegged its private sector commitment at $550 million, compared to Los Angeles’ $110 million, much of it outlined in a hastily assembled postscript to the application.

The cities chosen as empowerment zones will receive as much as $375 million in social services grants and tax breaks for businesses over five years.

Federal officials insist that the decisions were made on the merits, and on clear evidence of private sector and state and local government support.

Housing and Urban Development spokeswoman Janice Cump said the winners showed “an extraordinary ability to bring together people who would normally not sit a the table together” to revitalize a neighborhood. She said HUD Secretary Henry G. Cisneros was most impressed with Detroit’s application and the commitment by Chrysler, Ford and General Motors to create jobs for residents within the zone.

“It was truly extraordinary,” she said.

HUD officials said Los Angeles’ proposal lacked these kinds of commitments.

Riordan and Hernandez do not agree that Los Angeles’ bid was inadequate. But the proposal clearly was delayed and plagued by problems from its inception.

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As the application period opened in January, and 77 other cities were assembling teams to write their bids, Los Angeles City Hall was plunged into chaos by the Jan. 17 Northridge earthquake--the most costly natural disaster in U.S. history.

“You have to look at where we were last spring,” said Noelia Rodriguez, the mayor’s press secretary. “Our plate was very full.”

In the same period, Riordan’s economic development unit was navigating a difficult period of transition, noted one Community Development Department official close to the project. Former Deputy Mayor Al Villalobos had resigned in late 1993 amid questions about his private business practices. Mayoral adviser Bill Ouchi, who was juggling major budget and police reform initiatives, oversaw the office for several months until a replacement for Villalobos, Mary Leslie, was hired in March.

Exacerbating the confusion was the city’s Byzantine economic development apparatus, which spans several agencies. Robin Kramer, the mayor’s community relations chief, said the city’s proposal was handicapped because other large cities “have long-standing economic development departments, and we’re still trying to create one.”

When attention finally turned to the empowerment zone project, political infighting flared over which neighborhoods, community groups and council districts would be included in the targeted areas.

Nearly 10 times as much of the city was eligible for the aid as could be included in the 20-square-mile zone limit. Community leaders from some of the city’s neediest neighborhoods jockeyed for inclusion.

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Early on, a battle erupted over a proposal to include a section of Pacoima, in the northeast San Fernando Valley. Some city officials wanted the zone to extend into more of the Eastside and toward San Pedro. “Our initial perspective was it didn’t include enough of the South-Central area that was impacted by the last 20 years (of poverty). Why wasn’t that a bigger part of this?” said Howard Gantman, an aide to South-Central Los Angeles Councilwoman Rita Walters.

But Councilman Richard Alarcon, who represents Pacoima, rallied support from fellow Valley representatives, Councilman Joel Wachs and then-Councilman Yaroslavsky, as well as Rep. U.S. Howard Berman (D-Panorama City). The battle continued right up to days before the application deadline, as a final few census tracts were added to the zone in the Pico Union area of Hernandez’s district, records show.

In the end, city officials devoted far more time to setting the boundaries of the zone--covering segments of Pacoima, South-Central Los Angeles and the Eastside--than to deciding how to use the federal dollars to improve the areas included. The City Council approved the zone map April 13, and a private consulting firm--Hamilton, Rabinovitz and Alschuler Inc., hired at a cost of $220,000--went to work preparing the complex document with just 2 1/2 months to the submission deadline.

The application, consisting of several hundred pages, was compiled by a committee including the consulting firm, a subcontractor, a group of 60 nonprofit groups called the Coalition of Neighborhood Developers, and representatives of various municipal and county agencies.

The resulting document was long on philosophy and short on specifics.

Initially, there was no indication of how the $100 million in federal social services money would be spent. Rather, the application seemed to say to the Clinton Administration: Trust us. We know what we’re doing. We have a lot of community people working with us. With more federal money, we can do a better job.

City officials say it was an honest effort, recognizing that effective anti-poverty programs take time to develop. They also hoped to sidestep more potentially divisive political clashes over where the federal dollars would go. “A lot of people didn’t want to be specific because they wanted to fight over the money later,” said Gantman.

But that appeared to be precisely the wrong message. When Clinton announced the empowerment zone program, he stressed that many previous programs have not worked and he wanted to “focus the limited amount of money we have (to) get a tremendous amount of concentrated effort.”

An Administration source said Los Angeles’ approach was simply too uncertain.

“This is our last chance to show people that you can revitalize an urban area,” the official said. “People do not believe that any of these programs . . . actually work. If you don’t know what the city intends to do with money, it’s very difficult to evaluate how it’s going to be effective.”

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Only in the final days before the June 30 application deadline, after being prodded by HUD officials, did the city offer more details. Officials pledged that $10 million would be spent in the first year and a half to build at least three unspecified community facilities and two unidentified social programs for youth. They also pledged to spend $15 million to create jobs and to use $5 million to expand programs to eradicate eyesores such as crack houses and abandoned buildings.

The application said the funds would be doubled by tapping into other public and private sources, though it left unclear how that could be accomplished.

HUD officials said they were still not satisfied.

Early this month, as they reduced the field of competing cities to a few finalists, they notified Los Angeles officials that their application was not competitive.

In a conference call with city officials, HUD executive Roy Priest stressed that other cities had secured large matching grants from their states. California not only had pledged no funds, but was threatening to levy a 5% fee for its role in the program. Priest warned that this was a “deal killer,” records show.

City officials scrambled through the weekend to get the state to waive the fee and to shore up details about how social funds would be spent and how private firms would support the project. So intense and chaotic was the after-hours effort that some city staffers later had to hunt down their cars, which had been towed away for being illegally parked.

Now, just days before the empowerment zones selection would be made, Los Angeles officials were filing pages of last-ditch memos and supplements outlining for the first time how they would use $15 million of the social services money, and clearly itemizing commitments from public and private sector sources.

The bulk of the city’s documentation about the private sector concerned the still-budding efforts of RLA, the private, nonprofit riot recovery agency formerly known as Rebuild L.A., to stimulate economic growth.

“I was a little surprised that was a weakness, given that we are not lacking in private sector commitments. It’s just a matter of putting it together,” said RLA President Linda Griego, who was drafted into the last-minute effort to beef up evidence of business support.

The city also cited about $45 million in commitments from various banks to loan money to entrepreneurs, mainly in South-Central Los Angeles, a $60-million commitment from the AFL-CIO pension fund to invest in riot-torn areas, and plans of 23 businesses to invest or expand in the empowerment zone. The city said these businesses would create about 3,500 jobs.

According to HUD’s summary of the Los Angeles application, the city also said it had committed $460 million for capital improvements such as police stations, libraries and recreational facilities in the zone; the Community Redevelopment Agency had pledged $91 million; the Metropolitan Transportation Authority had pledged $2 million for a cultural “academy” at a future subway stop, and the city and county had promised nearly $2 billion for health services, housing and other social services.

The President’s offer of a $350-million consolation package falls short of the original empowerment zone designation, which would have been worth $300 million to $600 million per year to Los Angeles, according to Riordan, who said the loss “cannot be shrugged off as a minor setback.”

Griego suspects that some of the crucial information may have simply landed too late to change the Clinton Administration’s thinking. “People thought L.A. was going to get it. If you start with that, I think your work product is going to be kind of geared to a done deal.”

But she, like many others, doubts that the paperwork alone sank the city effort.

“Maybe we didn’t look hungry enough,” she said. “We should have fought this thing all the way through.”

Also contributing to this story were Times staff writers James Bornemeier and Richard C. Paddock.

This story was reported by Times staff writers Rich Connell, Hugo Martin, Ted Rohrlich and John Schwada. It was written by Connell.