CRA Chief Unveils Lean Budget, Warns of Cuts

The new head of the cash-strapped Los Angeles Community Redevelopment Agency proposed a $340-million bare-bones budget Wednesday that he said will combat blight while beginning to reorganize the agency against threatened budget shortfalls in coming years.

Acting Administrator Jerry Scharlin warned in a report to be considered Friday by the CRA board that the redevelopment agency could face deep cuts during the next four years unless it finds new funding sources.

His report also points out that 20 of the agency’s 31 community redevelopment projects lose money, and that city officials must consider whether to continue subsidizing the improvements.

CRA Board President Peggy Moore said the budget shows clearly that the agency will soon need financial help from City Hall and elsewhere to continue its work of recycling depressed neighborhoods.

City officials said Scharlin’s five-year budget projection, which was also released Wednesday, paints a grim picture.

“He faces a Herculean task to rescue that agency,” said Councilman Mike Feuer, head of the council’s Budget and Finance Committee.

Agency officials estimate that CRA revenues available for redevelopment work will fall from $123 million this year to $81 million in 2001, $64 million in 2002, and $48 million in 2003.

CRA revenues are expected to decline largely because one-time federal grants are running out. In addition, the lucrative Central Business District is reaching its limit on collecting taxes set aside for redevelopment.

The 50-year-old redevelopment agency receives the increase in property taxes generated from redevelopment projects to pay for public works improvements, subsidies and the agency’s operation.

The bulk of the proposed $340-million budget for this year, about $216 million, is going to pay down the agency’s $630-million debt and be shared with the county, city and schools.

Scharlin was brought in by the board to replace Administrator John Molloy, who took a retirement buyout after the board rejected his proposed budget for the current fiscal year.

By detailing which redevelopment projects are losing money, city officials said, the CRA appears to be laying the groundwork for ending some projects.

“We suspect that’s why they did that,” said Barry Glickman, the chief of staff for Councilman Rudy Svorinich, Jr., who represents Watts. “It’s a concern because some project areas need more help than others. Watts may never have the property tax revenue to support redevelopment without outside help.”

In his report to the board, Scharlin said three of the oldest redevelopment project areas--Hollywood, Crenshaw and Watts--are struggling financially, and “will require ongoing financial support from agency discretionary funds.”

Eight newer project areas are also not yet self-sufficient, while nine others, including the Adelante-Eastside, Mid-City and Reseda-Canoga Park projects, are new and just starting to generate tax funds, but are likely to become self-sufficient in 2004, Scharlin said.

One suggestion likely to stir controversy is an annual $9-million payment from the city general fund to the CRA, starting next year. That is when the Central Business District reaches a $750-million taxing cap and money normally going to the CRA will be diverted to the general fund.

Redevelopment officials argue that the $9 million is a property tax windfall for the general fund, created by the higher assessed values of redevelopment in the Central Business District.

But Feuer said he is unlikely to support the subsidy, given the other pressing needs of the city.

Scharlin is proposing that $123.6 million of the CRA budget be dedicated this year to work programs, and supporting a staff of 200 employees.

About 18% of the budget is set aside for salaries and other administrative costs, with the remaining $101.1 million proposed for “hard costs” including brick and mortar work, land, legal expenses and professional services.