Sherman Oaks Quake Plan Faces the Ax : Council: Feuer tells staff to start phasing out project, saying it is superfluous to other emergency funding programs.

Moving to make good on a campaign promise, Los Angeles City Councilman Mike Feuer instructed city officials Wednesday to take the initial steps to phase out a controversial earthquake recovery project for Sherman Oaks.

The project is one of five the council approved last year to aid hard-hit areas in the San Fernando Valley and Hollywood. The projects use redevelopment powers to generate funds for residential and commercial loans.

However, the Sherman Oaks project triggered strong community opposition due, in part, to the controversial history of the Community Redevelopment Agency and its power of eminent domain. In fact, the Sherman Oaks Homeowners Assn. filed a lawsuit in January to kill the project.

Feuer, who was elected to represent Sherman Oaks and adjacent areas after former Councilman Zev Yaroslavsky resigned to take a seat on the County Board of Supervisors, campaigned on the promise of eliminating the project, saying the project is superfluous to other emergency funding programs.

On Wednesday, he instructed the CRA and other city officials to draft a report within 30 days identifying the steps needed to kill the project. He also made a motion to put a cap on the legal fees the city can spend to fight the homeowners’ lawsuit.

“This is an unprecedented action,” Feuer said. “But in view of the widespread concerns and dissatisfaction, especially among local homeowners, I feel it is imperative to move expeditiously to dismantle this project and identify available resources for residential and commercial recovery.”

The request for a report on the project will be considered by the council next week. The motion to limit legal fees was referred to the council’s subcommittee on Housing and Community Redevelopment.

Feuer also formed a team that includes city managers and his own staff members to find alternative quake recovery loans and grants to repair quake-damaged businesses, condominiums and apartment buildings.

“Based on the first meeting of this group, I am convinced there remain significant resources,” Feuer said. “Our challenge is connecting the needs of our businesses and residents with available funds.”

Although Feuer’s motion to kill the project in his district requires a majority vote of the entire council, it is fairly certain that the council will support his move.