North Hollywood Redevelopment Plan Extended

In a move that local lawmakers said would boost efforts to establish a thriving arts and entertainment community in the Valley, the Los Angeles City Council on Tuesday approved a controversial extension of a multimillion-dollar North Hollywood redevelopment plan.

The new motion represented a slightly modified version of the North Hollywood Community Redevelopment Plan that was approved in 1995 by the council, but invalidated when a group of residents and business owners successfully sued the city for violating state laws by failing to hold proper public hearings.

The extension, which has been on hold for almost two years as the city reconvened hearings, will lift the spending cap on the 75-acre project from $89 million to $535 million and extend the Community Redevelopment Agency’s power to condemn property in the area to the year 2007.

“North Hollywood is poised for a golden opportunity to revitalize itself with the close cooperation of the arts and entertainment industries,” said Councilman Joel Wachs, who introduced the motion along with council President John Ferraro, both of whom represent portions of the area.

However, despite assurances by Wachs that the new plan includes safeguards against abuse that are not included in other CRA projects, opponents remained unconvinced. On Tuesday, some said they are considering filing a second lawsuit in an attempt to stop the project.

“The CRA was designed to misuse public funds,” said Jerry Day, a North Hollywood business owner and one of the plaintiffs in the original lawsuit against the city.

“My reaction to this is that they are spending money that they know they don’t have and they are planning to borrow money that they know they cannot pay back,” Day said.

CRA officials initially proposed the extension because they said the project had been hampered by the recession and the 1994 Northridge earthquake.

The spending increase will help finance dozens of new projects, including the rehabilitation of hundreds of homes and apartments for low-income residents, and provide subsidies for commercial development, officials said.

Wachs and Ferraro said Tuesday that subsidies would be focused on the NoHo Arts District and “arts and entertainment-related businesses and activities.”

One of the primary concerns of opponents of the project has been the CRA’s use of tax-increment financing, in which bond measures are financed with property taxes generated by new development.

Under the extension plan, the CRA can divert as much as $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, about $100 million would pay for interest on the bonds, and another $144 million would go to the county for property taxes.

Day and others contend 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 cover the loss.

But Wachs, who acknowledged his own reservations about the CRA and redevelopment projects in general, said the amended plan directs the agency to use bond financing only as a last resort.

“There have been abuses at times. . . . I do have problems with redevelopment and tax-increment financing,” Wachs said. “But, if we are going to have redevelopment, I want to make sure that the Valley and North Hollywood get their fair share.”

Another concern expressed by opponents has been the CRA’s use of eminent domain to condemn properties that stand in the way of its redevelopment projects.

To address this concern, Wachs said, no single-family home in good repair within the redevelopment area may be subject to eminent domain, and any other attempt by the CRA to condemn property would face a full council vote.

Since the project was adopted in 1979, the CRA has financed the construction or rehabilitation of almost 3,000 housing units and more than 450,000 square feet of office, retail and parking space, officials said.

CRA administrator John Molloy said the agency is working hard to combat the notion held by some residents that the agency is not acting in their interest.

“We’re convinced that we can change that,” Molloy said. “We believe that any person who takes a trip out to North Hollywood to see what’s been accomplished will be convinced of the success of our efforts.”