Development in Downtown Takes a Hit : Government: Faced with declining property values, Long Beach agency slashes funds for renovation projects and curtails business incentives.

Plummeting property values have forced the Long Beach Redevelopment Agency to drastically curtail its efforts to lure new businesses and shoppers to the city’s downtown area.

The agency, which has pumped millions of dollars into downtown businesses since the mid-1970s, slashed its downtown spending this year from $22.9 million to $13.5 million, and plans to operate at the leaner spending level during the next fiscal year, which begins July 1.

Until the agency’s financial outlook improves, it will be unable to offer new retailers financial incentives similar to those that brought Crate & Barrel, B.U.M. Equipment, Z Gallerie and other shops and restaurants to Pine Avenue.

The agency also has less money to help pay for special events, such as the Downtown Food Festival and a professional beach volleyball tournament, arranged by Downtown Long Beach Associates. The group, which represents 1,300 merchants, plans to raise other revenues to offset the Redevelopment Agency’s cuts.

In addition, the agency has postponed plans to spend $660,000 to convert the historic Walker Building on Pine into an art gallery and theater, $693,000 for new directional signs and $270,000 to pave several alleys that are heavily used by pedestrians.

City Councilwoman Jenny Oropeza, whose district includes part of the area, said she is concerned because more work needs to be done in downtown. She also pointed out that the agency will be unable to tap the downtown redevelopment budget for funds to stimulate the economy in other parts of town. “It’s having a ripple effect,” she said.

For example, the agency has postponed $2 million in loans to help fund the renovation of Los Altos Shopping Center.

The cost cutting was brought on by declining land values, a statewide trend that has hit urban areas such as Long Beach the hardest, said Susan Shick, the redevelopment agency’s executive director. The total value of all property within the 421-acre downtown dropped by $106 million this year to $869 million, according to agency financial records.

As the values of downtown buildings dropped, many owners obtained reductions in their property tax bills.

Councilman Jeffrey A. Kellogg, who heads the council’s economic development and finance committee, said he is not alarmed, however, by the agency’s inability to spend more on downtown.

The agency has helped transform the area from “an aging and unfortunately decaying downtown into a new and hopefully vibrant business community,” but needs to shift its attention to other parts of town, he said.

“You eventually have to wean the baby off the bottle,” Kellogg said. “The downtown has been supported by redevelopment for many years. The only way for it to stand on its own is to stop pumping money into it. We’ve been focusing too much on downtown. Let’s move forward.”

John Morris, owner of Mums Restaurant on Pine and president of the Downtown Long Beach Associates, said he does not think the agency’s financial problems will put the brakes on the downtown’s resurgence. Morris predicted that new businesses will continue to move in without financial assistance from the redevelopment agency.

“Business is great here,” Morris said. “And every day it keeps getting better.”