NoHo Aid Debated Amid County Crisis : Finances: CRA subsidy of arts district at risk as services are threatened.

Locals have long yearned to carve out an arts district from the motels and taco stands in this gritty suburb. They mortgaged their homes, planted trees and put up banners in pursuit of a Parisian-style haven of coffeehouses and theaters.

But now the so-called NoHo Arts District faces a possible end of public financing from the Community Redevelopment Agency, the bureaucracy that has plowed money into offices, apartments and playhouses across 740 acres of North Hollywood since 1979.

The CRA claims the lion’s share of property taxes in the area to finance its redevelopment dreams. That’s money that would otherwise go to county coffers at a time when Los Angeles County is facing an unprecedented fiscal crisis.

Cutting off redevelopment money now, just three years after the name NoHo was coined, would be “like preparing the batter for a cake, putting it in the oven, but not turning it on,” said Debra Sakacs, executive director of the Universal City/North Hollywood Chamber of Commerce. Her view is backed by City Councilmen Joel Wachs and John Ferraro, who have proposed extending the funding program with a focus on live theater and other arts.

But opponent Glenn Hoiby, an attorney, counters that “we have spent enough. It’s time to wean the baby from the bottle.”

CRA funding is ending because the project has reached the limit set in 1979, with $65 million spent on various CRA projects. Wachs and Ferraro support extending the program for another 12-year cycle. To do that, the CRA would be allowed to commit a share of property taxes worth up to $535 million, which would be tapped over the next 30 years.

A public hearing and City Council vote on extending the North Hollywood CRA project are expected in October.

“Let’s build on our success,” said Wachs. “Entertainment is our only major export anymore. It’s a big industry. It’s not just a frill.”

Not so fast, say the CRA’s critics. “Should the taxpayers subsidize this for God knows how many years to the tune of half a billion dollars when we are closing . . . health care centers?” asked Mildred Weller, a North Hollywood businesswoman.

The CRA absorbs 74% of tax revenues from properties in the project area, which is south of Hatteras Street between Tujunga Avenue and Cahuenga Boulevard. That means if you own a home there and pay $1,500 a year in property taxes, just $390 of it goes to the county for services such as firefighting and libraries. The rest goes to the CRA. In the most recent tax year, the CRA got a total of $5.8 million in property tax revenue from North Hollywood, said agency spokeswoman Gayle Anderson.

The reason is a decades-old policy called tax-increment financing, which is based on the rationale that tax-financed redevelopment programs increase property values, which in turn generate more tax revenue and enable still more redevelopment. Think of how much property values have changed since 1979, and you’ll understand why the agency gets so much.

The CRA has used its tax money to purchase and clear lots to sell to developers, give grants, make low-interest loans and provide hundreds of housing units. It gave breaks to Hewlett-Packard Co. to build an office, and helped build a shopping center with a badly needed supermarket.

It was also involved in funding the $45-million Television Academy of Arts & Sciences office project, and provided $250,000 in loans and grants to renovate the El Portal Theatre, among other efforts.

But even CRA backers don’t claim that North Hollywood has won its fight against blight. Many sections still feel dangerous. There are dilapidated motels and darkened storefronts. Average household income in North Hollywood is 14% lower than the Los Angeles average, according to the 1990 U.S. Census.

Office leasing rates are the lowest in the southeast Valley, said Stacy Vierheilig of the Charles Dunn Co. in Encino. And vacancy rates are the highest--about 25% for multi-tenant buildings compared to 11.5% areawide, she said. “It’s still hard to get [tenants] to go there.”

It doesn’t help that some of the CRA’s projects have been troubled.

Hewlett-Packard left its building, which is now up for sale. The El Portal Theatre was damaged by the earthquake before it opened, and awaits repairs. An ambitious plan to develop a hotel next to the TV academy fell through--after a bakery, thrift stores and other small shops had been leveled. Some owners had been forced out by eminent domain. Today, their properties lie vacant.

Critic Hoiby said the CRA ignored market forces and spawned boondoggles. “It was like taking a kid into a candy shop and giving them a wish list,” he said.

Lillian Burkenheim of the CRA acknowledges disappointments, but says the agency is not at fault. “North Hollywood was just coming together as the financing market was dying. You can only do so much,” said Burkenheim, the area’s project manager.

Yet, most agree that CRA money has helped nurture a very real flowering of the theatrical arts in an unlikely place. There are now at least 18 live theaters in NoHo, whose name is a play on New York’s SoHo district. CRA money has helped light up new marquees and turn old machine shops into venues.

The district is also heavily subsidized by artists. Most work for little or no pay. More than a few have donated countless hours to such non-aesthetic pursuits as fund raising, tree planting and chamber of commerce meetings. A couple of directors even took out loans against their homes to start theaters.

Their efforts have brought about a logo, a yearly festival, street banners and a mural.

“I decided to spend my money and time to build up a business in a depressed area,” said Dan Hirsch, owner of the Limelight Playhouse and NoHo Actors’ Studio. Extending CRA activities, he continued, “is what will encourage me to stay.”

The theaters are small and dispersed among auto-supply shops and vacant lots. Drawing audiences is a challenge, said Audrey Marlyn Singer, producing director of Actors’ Forum, whose venue is an old furniture store. At a recent show at Singer’s theater, the crowd was sparse, and a woman in a turban offered prunes from the snack bar.

And no amount of hype can flatten the hill that divides the real Hollywood from its northern namesake--NoHo is a distinctly suburban version of the avant-garde. Brian Connelly, former bass player for the band Thrust, said he had to cut his heavy-metal hairdo to be taken seriously as a NoHo scriptwriter.

But neither is NoHo, which benefits from Los Angeles’ pool of acting talent, a Rotarian Christmas pageant. This is the real thing, assures Lonny Chapman, producer-director of the Group Repertory Theatre. Like many NoHo denizens, Chapman has Broadway and Tinseltown credentials. North Hollywood is just like the low-rent areas around Greenwich Village in the ‘50s, where an Off Broadway theater culture flowered, he said.

The original Off Broadway had no CRA, but today, the arts need public backing, argues Brad Hills, associate artistic director for the Road Theatre. “My theater company exists totally due to the support of the city of Los Angeles,” said Hills, whose group occupies rent-free space in a CRA-backed building. “That’s the way it is.”

Opponents counter that the arts district is fine, but it needs to live without the CRA. “It’s not a commercially viable business,” said Hoiby. “It’s a labor of love for these people, and more power to them. But is this the way to spend taxpayers’ money when we have other needs?”

Hoiby argues that it’s time for private enterprise to step in, as has happened in other low-rent L.A. neighborhoods. Pat Hurst, a retail recruiter who has worked in Old Pasadena and Long Beach, said bustling pedestrian centers can develop in old neighborhoods. But “you can’t do a hopscotch approach. You must start with a little nucleus.”

A winning combination is a movie theater, then restaurants. Cooperative landlords, daytime crowds and visitors’ purchasing power are also key, she said.

Ironically, in North Hollywood, the sluggish retail market and low rents are what made it possible for the theater district to exist in the first place. And although artists say they want pedestrians, many recoil at the notion of bringing in a Mann’s theater or California Pizza Kitchen.

“We want a cultural arts district as opposed to a moviegoing or shopping district,” said Hills.

Left out of the debate on the CRA project seem to be area residents. Magnolia Boulevard is pretty quiet on weeknights, but the side streets are hopping with kids riding bikes or hanging around cars with their hoods up.

Apartment manager Ly Averett lives on one of these streets--less than a block from two live theaters. She has never been to a show and wondered whether the colorful Arts District mural “was for an art supply store, or what?”

Asked how she would like to see property tax money from her neighborhood spent, she didn’t even pause for breath. “Make safe school routes. I have a 6-year-old and I worry about him. And fix the streets, the potholes. Clean up the neighborhood. Get rid of the motels up and down Magnolia. You know, there’s streetwalkers out there.”