Bernardi Gets Court Victory Over CRA : Downtown: The ex-Valley official jolts agency's renewal plans.


Ernani Bernardi, the 83-year-old retired dean of the Los Angeles City Council, has scored an extraordinary court victory over the Los Angeles Community Redevelopment Agency, a surprise legal jolt that has top officials scrambling to save future renewal plans for the Downtown business district.

A Los Angeles Superior Court judge last week sided with Bernardi, ruling that California courts are powerless to undo a 1977 agreement the former councilman forced on the CRA that called for the agency to end its ambitious redevelopment effort in the central business district after it had spent $750 million.

For Bernardi, who represented the central San Fernando Valley for three decades, the ruling was a milestone win for his anti-CRA campaign, funded in part by the sale of videotapes of 1940s-era swing bands and operated out of his document-cluttered Van Nuys home.

It was a victory big enough to gall and frustrate Warner Bros. Senior Vice President Dan Garcia, CRA board chairman and confidant of mayors.

"So Bernardi thinks he's smarter than the state of California, the county supervisors, smarter than the mayor and City Council!" Garcia fumed sarcastically. "I question his motivation. This is all about his undying hatred of the CRA."

"Let's face it," said real estate attorney Doug Ring, whose Downtown clients are working on projects with the CRA. "This has a crippling effect on the agency's ability to do new projects Downtown."

Dov Lesel, the CRA's top legal adviser, said the ruling vests in Bernardi the power to checkmate the will of the Los Angeles City Council, the mayor and the County Board of Supervisors.

"It's an extraordinary decision," Lesel said. "The judge in effect said that no court in all the land has the authority to modify the agreement [unless] all the parties agree to such modifications."

With so much at stake, the CRA is preparing to file an appeal to rescue its Downtown project from extinction.

The 1977 agreement bars the CRA from spending more than $750 million in its 1,549-acre Downtown redevelopment zone, roughly enclosed by the Hollywood, Harbor and Santa Monica freeways and Alameda Street. The ruling does not affect the CRA's 22 other projects scattered throughout the city, including its North Hollywood and Hollywood projects, as well as Downtown's other redevelopment project on Bunker Hill.

Bernardi also has his hand in the North Hollywood zone. Later this month, the City Council is scheduled to decide whether to extend the life of the North Hollywood project for another 12 years. If the extension is granted, as is expected, Bernardi has vowed to help lead a homeowner effort to rescind it by putting the issue before the voters.

For now, though, Bernardi's court win hits the CRA hard because the agency has reached the $750-million spending ceiling in its premier Downtown urban renewal zone. Without an increase in the ceiling, the agency is effectively barred from engaging in new projects in the central business district.

And the CRA contends that its job of revitalizing Downtown is not complete.

At least hundreds of millions of dollars in additional spending are needed to finish the job, including plans to build low-income housing and a hotel complex next to the city's vast new Convention Center, say agency officials, Mayor Richard Riordan's office and Councilwoman Rita Walters, who represents the area.

Redevelopment agencies principally raise money by using the additional property tax revenue--called tax increment funds--generated by rising property values inside the zone.

In its attempt to lift the spending cap, the CRA first got approval from other government agencies, the city, the County Board of Supervisors and the trustees of the Los Angeles school and community college districts, all of whom have a stake in the property tax revenue generated in the zone.

After winning the support of these other taxing jurisdictions, the CRA went to Bernardi last for approval. Bernardi is a key player because, as a private citizen, he sued the CRA in the 1970s to limit its activities in the Downtown district. To settle that lawsuit, the CRA and then-Mayor Tom Bradley agreed to the $750-million spending cap.

In part, the 1977 agreement said its terms would be "forever binding and conclusive upon the parties hereto."

Bernardi, who retired after 32 years on the City Council in 1993 with a reputation as an irascible, tight-fisted fiscal watchdog, refused to sign off on lifting the cap, forcing the CRA several months ago to go to court to get its way--without Bernardi.

The surprise, however, came last week when Superior Court Judge Florence Pickard ruled that the courts had no jurisdiction to tamper with the agreement without Bernardi's approval.

Garcia and others believe it is unjust that Bernardi can single-handedly frustrate the will of several government entities and their elected officials.

"We're hopeful we can win on appeal," an exasperated Garcia said this week.

Meanwhile, a host of ambitious CRA projects are on ice until the agency can clear the Bernardi hurdle.

Although the agency is currently taking in about $45 million a year in tax increment revenue from the Downtown district, all but a pittance is used to pay off debts.

"Actually, we ran out of money for work programs last year," said Pierre Lorenger, the agency's chief financial officer. "Virtually all the money [except for about $750,000 for administrative costs] is going for debt service."

But once the cap is lifted, the CRA can borrow money to finance its work program.

Depending on the number of projects the CRA undertakes, the estimated costs vary from hundreds of millions to a couple of billion dollars. The agency has requested that the spending cap be raised to $7.1 billion, a ceiling set by the City Council.

Don Spivack, CRA director of operations, ticks off a long list of potential CRA projects:

* The agency would like to develop 3,000 single-room occupancy units for Downtown's poorest citizens. "A half-dozen major hotels along Spring and 5th streets that are privately owned need rehabilitation to make them suitable for permanent family housing," Spivack said.

* About 6 million square feet of vacant or underutilized space in the city's historic core along Spring Street and Broadway need to be revitalized. They also want to address the growing vacancy rate in buildings along 6th and 7th streets between Olive and Flower streets.

* Plans call for making good on a long-term obligation to develop various levels of housing in South Park, a residential complex on the southern edge of Downtown. "Our target, set in the 1970s, was to build several thousand units there," Spivack said. "We have built about 650 so far."

* Myriad public facilities need upgrading, including the roadway and sidewalks of a vibrant center of Latino retail activity along Broadway that need rebuilding.

* Downtown residents need open space. "At present we have two parks serving some 14,000 residents of the central city east area, and neither are more than a third of an acre each," Spivack said.

But Bernardi disputes the need for the CRA's continuing involvement Downtown.

He maintains that lingering blight can be eliminated by the private sector with conventional help from the city. Moreover, the cash-strapped city needs the tax dollars for basic services, not redevelopment, he said. Finally, the former lawmaker distrusts the CRA's big plans to help the poor and homeless.

Although the CRA has portrayed Bernardi as a selfish codger waging a personal vendetta against the agency, Bernardi said he would accede to a lifting of the cap, if that were the wish of the city's voters.

The CRA "asked me what I wanted" in exchange for agreeing to lift the cap, Bernardi said last Friday. "I told them if it was put to a vote and that's what the voters wanted I'd accept that."

But his ballot-box solution to the impasse was not embraced by the CRA negotiators, Bernardi said.

Ron Deaton, chief legislative analyst for the city of Los Angeles and the chief negotiator, said he could not confirm or deny that Bernardi had made such an offer.

Numerous suburban homeowner organizations support his effort to put the brakes on the Downtown project, Bernardi said.

"We need that tax money to fund fire, police and schools, not pork barrel CRA projects for big developers," says Gordon Murley, president of a federation of 19 San Fernando Valley-based homeowner groups that is backing Bernardi's fight.

"We recently reaffirmed our support for him when he came around and spoke to our groups and sold his videos," Murley said. Bernardi, a former saxophone player for big bands of the '40s, has been hawking a videotape of big bands, at $15 each, to help fund his crusade.

Bernardi also is backed by the Federation of Hillside and Canyon Assns., which represents more than four dozen homeowner groups based on the Westside and in the Santa Monica Mountains, said Patricia Bell, federation president.

But Garcia is not impressed.

"Bernardi is not representative of the city, and I'm not sure these groups are either," he said. "If they really want to stop redevelopment, they should get themselves elected and do something to deal with the reality of poverty."

Meanwhile, Bernardi suspects that the CRA is literally hoping he will die and that his crusade will die with him.

"I might advise them in this regard that I have an uncle who died when he was 103 and an aunt who's 98 and still alive," said the man who is fighting to have the last word.

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