CRA Let Valuable Land Sit Idle, City Audit Says

The Los Angeles Community Redevelopment Agency has allowed properties it bought for $49 million to sit idle for years when it should have leased or sold them, according to an audit released Thursday by City Controller Rick Tuttle.

The CRA’s failure to carefully manage its real estate has meant that “the land has remained vacant resulting in lost economic benefits that should have accrued from the expenditure of public funds,” Tuttle wrote in the audit.

The agency uses its power of eminent domain to buy properties and sell them to private developers to end blight. Sometimes the agency sells the properties at a discount to encourage development.

The bulk of 80 vacant parcels owned by the CRA were purchased between 1986 and 1990 for $31 million, Tuttle said.

Looking more closely at six properties, Tuttle’s audit found that they were marked by a history of failed development deals.

A 12.4-acre parcel, purchased for $18 million as the site for the South Park Phase III housing project in Downtown Los Angeles, has had one developer who lost his financing and another who went bankrupt, Tuttle noted. Now a third developer has agreed to build 75 low-income, senior citizen housing units on a portion of the site.

CRA Chairman Dan Garcia, in a written reply to the audit, noted that the properties identified by Tuttle were bought to aid “specific developments that the community and [Los Angeles City] council members from redevelopment areas have mandated” and that the region’s weak real estate market has hamstrung the CRA’s ability to dispose of them.

The agency, Garcia wrote, “can’t just scrap the proposed projects and sell the land at fire sale prices in a depressed real estate market.” State law, he added, prevents redevelopment agencies from selling land unless they can prove it will directly eliminate blight.