N. Hollywood Redevelopment Project Extended : City Council: Vote continues controversial improvements until 2019 and raises spending cap to $535 million, giving a symbolic boost to CRA.

Breathing new life into a controversial project, the Los Angeles City Council voted unanimously Wednesday to extend a redevelopment project in North Hollywood and dramatically increase the amount of money to be spent on it.

Without the extension, the 750-acre project would have run out of money next year. But the vote continues the project until 2019 and lifts the spending cap from $89 million to a maximum of $535 million. The vote also extends the power to condemn property to the year 2007.

The extension also gave a huge boost to the city’s beleaguered Community Redevelopment Agency, which was recently dealt a blow when it was prohibited from lifting the spending cap on a redevelopment project in Downtown Los Angeles.

Councilman Joel Wachs, who represent parts of the redevelopment area, described the extension as vital to the goal of developing North Hollywood as the city’s newest arts and theater center.

“The arts not only create the kind of environment in which people want to live, but they are a job producer in every level,” he said. “This will help do that.”

But the vote was not without opposition.

A handful of North Hollywood residents and business owners protested the vote, saying the project has for years wasted money and would continue to divert property taxes that are needed for such things as police and hospital services.

“The bottom line is this agency has been here 16 years and it hasn’t earned its keep,” said longtime CRA critic Mildred Weller, who argued that many of the CRA improvements could have been built by the private sector without public funding.

The council approved the extension after a 4-1 vote of the CRA’s board of commissioners in favor of the project, with Commissioner Bobbi Fiedler, a former San Fernando Valley congresswoman, being the only opponent.

Fiedler argued that the project will divert too much money that would otherwise go to city and county coffers, forcing residents in other parts of the city to pay extra taxes and fees to make up for the loss.

“When we take dollars away, we take them from people who don’t have a lot,” she said.

In response to these and other concerns, the council adopted several amendments to the extension, including one that would limit administrative charges to only 10% of the project costs and one that would prohibit the CRA from condemning property in the project area without the approval of the council.

“There are no Solomons among us,” Wachs said, referring to the biblical king noted for his wisdom. “To the extent anything isn’t working we could bring it back and do it again.”

The 10% limit on administrative spending got a lukewarm reception from CRA administrator John Molloy, who said the agency normally spends about 17% on administrative costs. He had suggested that the council look at the CRA’s overall budget each year to make cuts instead of imposing strict limits for one project.

The vote was also a victory for the North Hollywood/Universal City Chamber of Commerce and other business and community groups that said the CRA’s help is still needed to eliminate areas of blight in North Hollywood.

“Since 1979, the CRA has accomplished much,” said David Potell, executive director of the East Valley YMCA in North Hollywood. “However, areas continue to suffer from blight, which continues to hamper growth, development and investment.”

Since the project was adopted, the CRA has funded about $77 million in improvements, mostly through bond measures financed with property taxes generated by new development, a method known as tax-increment financing. Normally, property taxes are split among the county, local school districts and the city.

The project has rehabilitated 882 homes and apartments for low- and moderate-income families, built 883 new units and constructed 469,000 square feet of office, retail and parking spaces, according to a CRA report.

CRA officials proposed the extension because they said the 16-year-old project has been hampered by the recession and, most recently, the Northridge earthquake.

The proposed spending increase would help finance at least 29 new projects, including the rehabilitation of about 240 homes and apartments for low-income residents, street lighting improvements and subsidies for commercial development, according to CRA officials.

Under the extension plan, the CRA can divert up to $535 million in tax increments from the area. If long-term bonds are the only means of financing, about $185 million would go toward improvements, with about $100 million going to pay for interest on the bonds. Another $144 million would go to the county under a settlement agreement reached a few years ago in which the county demanded that more property taxes be returned to its budget.

The extension was a symbolic victory for the CRA, which was harshly criticized last year when it sought to move into other parts of the Valley after the Northridge earthquake. It has also stumbled in its effort to lift a spending cap on a key Downtown redevelopment project.

Last month, a Los Angeles Superior Court judge ruled that California courts cannot allow the agency to lift a $750-million spending cap on the Downtown project that was forced upon it by former Councilman Ernani Bernardi.

CRA officials plan on appealing that decision.

Last year, a Sherman Oaks homeowners group sued the city of Los Angeles in an attempt to keep the CRA from using redevelopment powers to rebuild the quake-ravaged community.

The project has since been put on hold at the request of freshman Councilman Mike Feuer, who represents Sherman Oaks and adjoining communities.