Redevelopment Agency Faces Reinvention

Los Angeles’ financially troubled Community Redevelopment Agency faces an uncertain future with the resignation last week of its board chairwoman and a planned takeover by some members of the City Council.

A showdown over the takeover was averted Friday, when the City Council postponed action on naming itself as the Community Redevelopment Agency--a dramatic move in which the council would have supplanted a citizens board appointed by the mayor as the agency’s governing body.

The issue was rescheduled for Feb. 2, however, and those seeking to overhaul the beleaguered agency are preparing to press their case as part of a broader plan to refocus the way the city spurs economic development.

“We went to the public in a series of hearings and the public made it abundantly clear they want accountability of their elected officials over the agency and not intermediaries,” Councilman Mark Ridley-Thomas said Friday, referring to the appointed board members.

The takeover is being proposed at a vulnerable time for the agency, which was established 50 years ago to attack blight.

A powerful economic engine that drove the development of high-rises in downtown Los Angeles, the CRA began sputtering a couple of years ago as the property tax revenues that fuel its operation declined because of a slumping real estate market.

Although property values are rebounding, the agency’s $630-million debt has loaded it down, and CRA Administrator John Molloy warned the City Council last week that he must find a way to plug a potential deficit of $8 million this year just to pay the staff.

“The property tax revenues tend to trail the economy by a couple of years,” Molloy said, warning that in the interim he may have to ask for more early retirements from a work force that has already been cut to 210 employees from 350.

CRA officials are also considering borrowing against future tax revenue and asking the City Council for financial help.

“There are some tough decisions that have to be made,” said Christine Essel, who resigned Monday as chairwoman of the CRA board.

In quitting, Essel cited increasing demands on her time from her job as an executive with Paramount Pictures and her service as chairwoman of the California Film Commission.

She denied that her departure had anything to do with the CRA’s financial and organizational uncertainties, writing to Mayor Richard Riordan that the agency has helped improve the economy of Los Angeles during the six years she served on its governing board.

The CRA is funded with the property tax revenue generated when land in a redevelopment project area increases in value.

It has the controversial power to seize property through eminent domain, so that multiple small parcels can be put together as a large property for developers of big projects. It can also provide development loans and pay for streets and sidewalks as incentives for developers.

Even while it struggles to make payroll, the CRA is continuing to work to spawn $2 billion in private development from Bunker Hill to the largest redevelopment project area in North Hollywood, Molloy said.

Councilman Hal Bernson, a longtime critic of the CRA for its high overhead and heavy borrowing, said he is concerned by the CRA’s shaky finances.

“I think we have to do something to assure ourselves that the CRA is going to be financially able to support itself,” Bernson said.

Some of Bernson’s colleagues say they know what to do to make the agency more effective.

The takeover is being proposed by council members Rita Walters, Mike Hernandez, Rudy Svorinich Jr. and Ridley-Thomas, who represent economically deprived areas of south and central Los Angeles.

What they share is a dissatisfaction with the city’s scattered economic development programs.

Under their plan, the City Council would name itself as the CRA, and a new advisory commission appointed by the mayor and council would also be created to help the City Council oversee itself in its CRA capacity.

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Hernandez stressed that this commission, not the council, would provide oversight on a day-to-day basis.

The agency would become more effective and cost-efficient under control of elected officials accountable to the voters, Ridley-Thomas said. “It [the proposal] enhances both accountability and efficiency,” he said.

Council President John Ferraro, whose district includes the North Hollywood project area, is intrigued by the idea but is still studying the proposal.

“City councils all over the state serve as the board for their CRAs and it seems to work well,” Ferraro said Friday.

In addition, the proposal would eventually consolidate the CRA’s economic development activities into a new Economic Development Department, with similar job-producing programs as those currently operated by the city Community Development Department.

The CRA’s housing programs would be given to the city Housing Department.

“I think the city can do much more to promote economic development, especially in economically disadvantaged areas,” said Councilman Mike Feuer, who like Ferraro is still reviewing the proposal.

However, although there is broad agreement on the council that the city can do much better at economic development, there is also great reluctance by a large number of council members to jump into the potential political and financial quagmire of the CRA.

“A whole lot of us have a whole lot of questions about what that means,” Councilman Joel Wachs said of the takeover. “What I’m really concerned about is the CRA is in really bad financial straits, and what I don’t want to see happen is the city taxpayers having to start picking up the bills for the CRA.”

Wachs said the City Council might be more inclined to use general fund money to bail out the CRA if it takes over the agency.

“I couldn’t begin to support this until we had a fiscal analysis as to whether the city’s general fund is going to be drained to pick up the CRA’s expenses,” Wachs said.

However, Hernandez said he does not envision the City Council shifting large amounts of money from police and fire services to developer subsidies.

Instead, he said the proposal would allow the new Economic Development Department to better focus its existing resources.

Mayor Richard Riordan opposes a council takeover of the CRA, in part because he believes it would reduce accountability if the CRA administrator “has to respond to more than one boss, in this case 16 bosses,” said Deputy Mayor Rocky Delgadillo.

Delgadillo also said there is concern that an economic development agency must be able to act with “flexibility and agility” to changes in the economy and demands for assistance.

“Having the council act as the CRA adds another level of complexity to the process of economic development,” Delgadillo said.

Ridley-Thomas said the council is moving forward with its plan because the mayor has failed to come up with an alternative.

“One deputy mayor after another has not been able to get their arms around this issue of economic development,” he said.