Council, Don’t Grab CRA

The Los Angeles Community Redevelopment Agency is hemorrhaging: $630 million in debt and down to 200 employees from a high of 350, even as the number of projects it oversees is up from 17 to 31, with more in the works. Revenue projections for the CRA have been wholly unrealistic, and there has been an exodus in upper management. Steps must be taken to right this ship, but what exactly should be done? This much is clear: A Los Angeles City Council takeover is not a good idea.

CRAs were created in California in 1948 to attack urban blight. These are powerful state agencies under local control and funded by property tax increments. They have the right of eminent domain, which means they can seize properties to create major new developments. The CRAs can also buy and sell property and issue bonds. The Los Angeles agency has been so cash-strapped that it considered a plan to float $1 million in bonds just to help pay administrative costs. Fortunately, the CRA board rejected that on a 4-3 vote.

The City Council has debated a takeover for years, and several members have long maintained that the best solution would be to consolidate its functions into a new economic development department. Among the many concerns about such an idea is whether the council could be trusted to not carve up projects into 15 council district fiefdoms. But an important mandate from the city’s voters ought to shove even discussion of a CRA takeover way down the council’s “to do” list.

The council’s first duty now is charter reform. Last month’s resounding electoral victory for reform leaves the council (and the mayor and city attorney) with less than one year to review scores of existing city ordinances and code provisions. In that brief time, the council must also pass ordinances that comply with the new charter.

Meanwhile, an interim plan for CRA improvement from the mayor and the CRA board seems very reasonable: Follow the Metropolitan Transportation Authority model of hiring a corporate turnaround expert to get to the bottom of the agency’s finances. That person, already hired for six months and $78,000, is a man recommended by MTA chief Julian Burke: Jerry A. Scharlin, who has 13 years of experience with a national corporate turnaround and asset management firm. That’s a good way to proceed, given the heavy lifting that the council already faces.