Heady Plans, Hard Reality

Two decades and $117 million in public money later, efforts by the city of Los Angeles to rescue suburban North Hollywood from creeping blight have largely struck out, a Times computer analysis has found.

North Hollywood had seemed a promising candidate in 1979 for one of the city’s most ambitious redevelopment projects ever. It sits adjacent to enclaves of entertainment industry jobs in the San Fernando Valley and is freeway-close to downtown. Plans called for a Metro Rail subway station, now set to open this June, with the potential to attract thousands of daily commuters and new business to the area.

But the meager results logged so far in North Hollywood offer a cautionary tale to hundreds of other California communities that are investing more than $1.5 billion annually in hopes of reviving fading areas.

The number of vacant and deteriorating homes--a key indicator of blight--has doubled in the 20 years that the city’s Community Redevelopment Agency has been on the job in North Hollywood. Only a fraction of the new homes and businesses the CRA pledged to build have been erected, and plywood boards still protect shut-down storefronts.

Of perhaps greater significance, North Hollywood’s recovery has lagged behind other depressed areas in Los Angeles that improved without any money from the city’s CRA, according to the Times analysis of census, property and employment data.

“The area has become worse,” said Patrick Berberian, who has run a movie prop rental business in North Hollywood for three decades. “It’s a shambles.”

Agency officials dispute that, pointing to reinvigorated parts of the community. A glitzy building that houses the headquarters for the Academy of Television Arts and Sciences, home of the Emmys, opened on the northeast corner of Lankershim and Magnolia boulevards. The El Portal, a movie palace built in 1926, reopened this year as a performing arts complex that anchors several blocks of cafes and galleries that optimistic city officials have designated the NoHo Arts District.

Progress was slowed by the early 1990s recession and the 1994 Northridge earthquake, officials said, adding that conditions would likely have slipped even further without the $117-million public investment in North Hollywood.

“What it bought you here is sanitary, safe housing,” said Lillian Burkenheim, the CRA executive in charge of the North Hollywood project. “It bought you a shopping center that people can walk to. It bought you a neighborhood you can walk around in. North Hollywood is better today than when we started the project.

“We would all like to move forward faster,” Burkenheim acknowledged. “I keep wishing for that magic wand, but the magic wand isn’t there.”

To test the claim that blight would have spread without the CRA’s intervention, The Times analyzed 10 neighborhoods that were statistically comparable to North Hollywood 20 years ago.

Although they received no redevelopment money, most of the comparison areas registered improvements in income and poverty rates equal to or better than the heavily funded North Hollywood project area, the analysis found.

“Whatever good has happened in North Hollywood is more grass-roots,” said Joel Kotkin, a senior fellow at the Pepperdine Institute for Public Policy and research fellow in urban policy at the Reason Public Policy Institute, a libertarian-oriented think tank. “I don’t think the redevelopment agency had anything to do with it.”

Although some of the comparison neighborhoods were in communities with desirable locations or reputations, all shared fundamental similarities with North Hollywood. Comparable neighborhoods in Mar Vista and Silver Lake, for instance, contained similar stocks of older homes and small shops. Sections of Van Nuys and Mid-City had the same obsolete warehouses and factories found in North Hollywood.

The CRA, created more than 50 years ago to revive decaying areas of the city, starting with downtown, has the power to buy land or force its sale through condemnation in the case of an unwilling owner. The land is sold at a low price to developers who promise to erect desirable new buildings such as offices or housing.

The construction aims in part to increase property tax revenues. But instead of going to police, firefighting, schools and other services, the agency uses the extra money to finance more redevelopment projects.

Such tactics are often controversial. In its 50-year history, the CRA has uprooted thousands of families and razed entire neighborhoods. Its most visible legacy is towers above downtown, where officials spent more than $1 billion to erect a skyline of high-rise offices in place of deteriorated neighborhoods and business blocks. The agency also fostered a cultural nexus on Bunker Hill that includes the Music Center and the Museum of Contemporary Art. Throughout the city, thousands of affordable apartments developed by the CRA house low-income families.

Mar Vista Goes It Alone

From the harbor to the Valley, 31 redevelopment areas now cover 22,000 acres in the city, up from 5,000 acres 20 years ago. The City Council will decide later this year whether to launch the largest yet, centered on the Valley communities of Pacoima and Arleta.

The North Hollywood analysis, however, shows that redevelopment is not a panacea. In 1979, part of Mar Vista, on the Westside, looked remarkably similar to North Hollywood.

About 27% of the population lived in poverty, compared with 26% in North Hollywood. In both areas, about 5% of the homes were vacant. Per capita income hovered at $15,200 in Mar Vista, compared with $14,600 in North Hollywood.

Twenty years later, the two areas still look alike.

Poverty has decreased at the same rate, to about 21% of the populace in North Hollywood, 22% in Mar Vista, according to 1997 estimates from the U.S. Census Bureau. The number of vacant homes has nearly doubled in both places to 9%. Per capita income grew to $16,000 in North Hollywood. In Mar Vista, it climbed to $21,200.

And Mar Vista did it without the help of the redevelopment agency.

That achievement is hardly unique.

Of the 10 Los Angeles neighborhoods most statistically similar to North Hollywood two decades ago, most enjoy the same or better quality-of-life standards today as North Hollywood.

Parts of Mid-City, Venice and Silver Lake all have enjoyed residential and economic rebirths courtesy of the private sector, without help from redevelopment money. Although smaller geographically, the matching areas were nearly identical demographically to North Hollywood.

“It’s hard to see what they got for their money,” said Michael Dardia, a researcher with the Public Policy Institute of California, who developed the methodology used by The Times and reviewed the results. “In terms of changes in the quality of life, it’s hard to see any impact.”

Civic leaders and local residents credit private developers, location and reputation, rather than government, for reviving the other areas.

Venice has the beach. Silver Lake has long been a bohemian refuge. And Mar Vista boomed after young professionals discovered it in the 1980s and ‘90s as an affordable Westside oasis.

Redevelopment officials blame North Hollywood’s location as a key reason for its problems.

“I don’t have anybody that’s dying to live in the East Valley,” Burkenheim said.

To be sure, North Hollywood is better off in some ways today than it was 20 years ago. Per capita income is higher. Poverty is down. And not all of the 10 areas did better than North Hollywood. Westlake and sections of Van Nuys, for instance, saw poverty rise and per capita income fall.

But those advances don’t satisfy critics, who say the CRA squandered public funds, undermining its effort in North Hollywood.

The agency “is an ineffective, wasteful bureaucracy that is not producing what it is supposed to produce,” said Glenn Hoiby, an attorney who chairs the residents’ panel advising the CRA on North Hollywood redevelopment.

One thing redevelopment is clearly supposed to produce is more jobs. Job creation is a key measure of the success of redevelopment, according to Jerry Scharlin, the agency’s new acting head. But since 1992, the ZIP Code that includes the North Hollywood project has registered a decline in number of jobs, according to state Employment Development Department data.

During the same period and by the same measure, more people went to work in eight of the 10 comparable areas of Los Angeles, the Times analysis found.

Burkenheim attributed the loss of jobs to subway construction, which ripped two major car dealers from the redevelopment area. She said the departure of aerospace firms as part of the region’s loss of defense contracts also cost jobs.

Some of the lost jobs should be regained in June when the subway opens, Burkenheim said.

But some experts said redevelopment itself is partly to blame since the agency can take extreme measures that wind up depriving a community of existing businesses and housing.

“Redevelopment means the bulldozers are coming,” said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. “A lot of time you displace businesses. Once you do that, it’s tough to replace them.”

Property values also lagged in the analysis of comparable communities. Although homes and businesses in North Hollywood increased in value at a slightly faster rate than the county and city overall in the last 20 years, they didn’t come close to the growth in the most comparable areas of L.A.: Mar Vista and Van Nuys, both of which grew at more than double North Hollywood’s rate.

Academy Project Scaled Back

North Hollywood was one of the original towns in the Valley, founded as the community of Toluca late in the 19th century. It remained a vibrant shopping district during the suburban boom after World War II, but began to decline rapidly in the 1960s.

Ground zero for the redevelopment project was the intersection of Lankershim and Magnolia, where officials and developers envisioned creation of a new “city within a city.” Plans called for 2.2 million square feet of offices, stores and upscale restaurants, including more than 700 housing units, a 400-room four-star hotel, a club and a movie theater.

The agency razed 28 businesses and handed $5.5 million in subsidies to the developers. The project’s centerpiece was an office building that includes the new home of the television academy.

Twenty years later there is no hotel, no commercial movie theater and just 13% of the promised office space.

Ken Adkins, an original partner in the $45-million academy project, oversaw construction of the first two phases of the development: 248 apartments and 220,000 square feet of office and commercial space.

Adkins said he needed the agency’s eminent domain power to assemble land for the succeeding phases, but that agency officials failed to take the necessary legal steps. The result was a more than five year delay in the agency’s ability to condemn property, which Adkins said was fatal. The economy began to falter. Tenants backed out. Financing collapsed.

Two years ago, a group of original owners sold out for $23 million, nearly half of the cost to build the complex.

The current owner, Prentiss Properties, decided last year to forgo the hoped-for restaurants and retail shops on the ground floor and instead convert the space to offices.

Burkenheim, the CRA executive in charge in North Hollywood, conceded that the academy complex did not turn out to be the massive, community-changing development once planned. But she said it created 480 jobs, many for highly paid professionals.

Tenants in the buildings today include entertainment giants Disney and Sony, and the new local office of the CRA.

Burkenheim still holds out hope that much of the adjacent land will be developed with a movie studio and office complex. DeveloperJ. Allen Radford is negotiating with the CRA to build the project.

Controversy also plagued the agency’s other two large commercial developments.

Hewlett-Packard poured $26.8 million into a new training center on Lankershim before selling the building in 1996 for $9.6 million, records show. After languishing nearly empty for years, most of the space was recently rented by Walt Disney Pictures and Television.

The CRA also spent at least $3 million to subsidize the purchase of a site for a shopping center anchored by a Ralphs market. But Ralphs spokesman Terry O’Neil said the grocery chain probably would have built a new store in the area without agency help.

“We were looking in North Hollywood anyway because the old site wasn’t sufficient. We would have done something in North Hollywood,” O’Neil said.

Although many residents like the new shopping center, they said there isn’t enough of that kind of development.

“When I need something, I go to Burbank,” said Mary Arrieta, 72, a 32-year resident of the area.

The agency’s use of hardball tactics also has contributed to the problems with new business, some critics said.

By using eminent domain to obtain one-third of all the properties taken in North Hollywood--the highest percentage of any major redevelopment project in the city--the agency created a vocal, energized bloc of local residents who opposed the CRA and eventually took over the citizens advisory panel. They were largely responsible for filing the challenges that delayed the academy project.

To improve housing, the CRA had promised to build nearly 2,700 homes, weed out blight and cut vacancy.

It fell short on all three counts.

Plans called for 2,671 new dwelling units by 1994. The reality today: 1,014 new residences, a little less than 40% of what was planned.

The percentage of buildings that require repairs nearly doubled between 1979 and 1995, to 85.9%, according to the agency’s own figures. The number of empty homes and apartments also almost doubled, to 8.5%, according to census data.

The agency bought and tore down single-family homes and small businesses, replacing them with apartment complexes with units reserved for the poor.

But in doing that, planners broke a promise they made when they began in 1979: to avoid concentrating low-income housing.

On one block of Harmony Avenue, the agency spent $21.8 million to erect hundreds of new apartments for low- and moderate- income tenants.

“The neighborhood has lost its family feel,” said Lucia Affentranger, 59, whose front window faces the back of an apartment complex. “We used to take care of each other’s homes when we went on vacation. Now I hardly know the people who live around here.”

Maria Patrosyan said her family loves the spacious apartment they rent in an agency-financed building on Harmony Avenue. The street the agency helped build up is very family oriented, Patrosyan said, adding that the apartment building she lives in even has a playground for children.

“Our building is very good,” she said. “The rooms are big, and the neighborhood is a nice place to live.”

Burkenheim said she is proud that the agency has been able to provide quality affordable housing, although she acknowledged that ideally it should not have been clustered on Harmony.

Even when they succeeded in bringing in new homes, agency officials sometimes paid far more than the market rate.

For instance, the nonprofit group L.A. Family Housing built 14 low-income apartments on Harmony. The redevelopment agency provided $713,000 in land toward the project. L.A. Family Housing then spent $2.1 million to build the apartments.

In the end, the project cost $205,786 per unit--in a market where condos frequently sell for $130,000 or less.

The agency has also had trouble collecting on loans made to developers to build low-income housing. In North Hollywood the CRA has made seven such loans totaling more than $6.5 million on which borrowers have paid back no principal, records show.

Some local critics of the CRA also say they are infuriated by agency red tape.

Casey Hallenbeck bought Phil’s Diner on Chandler Boulevard two years ago.

The young entrepreneur hoped to revitalize the fading diner, a 1928 landmark, figuring it could be a symbol of the success of redevelopment, a reminder of the energy and style of old North Hollywood.

So he applied for a CRA loan.

“They put me though a rigmarole for more than a year, and in the end, there was so much red tape and strings attached, it wasn’t worth it,” Hallenbeck said. “We decided to close it up.”

Agency officials have revived talks to help Hallenbeck, but the diner remains closed.

*

Researcher Donna Mungen contributed to this story.

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Still Struggling

Despite benefiting from tens of millions of dollars in aid, North Hollywood failed to improve significantly compared with similar areas in key measures of income, overcrowding and poverty.

PER CAPITA INCOME

In thousands

*

North Hollywood

1980: 14.6

1997: 16.0

*

10-community average

1980: 15.2

1997: 17.1

NUMBER OF PEOPLE PER HOUSING UNIT

North Hollywood

1980: 2.14

1997: 2.60

*

10-community average

1980: 2.22

1997: 2.67

PERCENTAGE OF PEOPLE IN POVERTY

North Hollywood

1980: 25.9%

1997: 21.1%

*

10-community average

1980: 25.3%

1997: 21.7%

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North Hollywood Spending

Between 1979 and 1999, a total of $117 million was spent on revitalizing North Hollywood. Here is where the money went:

Infrastructure: 9%

Business development: 39%

Misc.: 27%

Housing construction or rehabilitation: 25%

*

Sources: U.S. Census Bureau; city of Los Angeles Planning Department; CRA. Researched by T. CHRISTIAN MILLER/Los Angeles Times

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The Dream vs. Reality

When the project to revitalize the core of North Hollywood began 20 years ago, politicians and planners developed several different blueprints for a “city within a city” at the corner of Lankershim and Magnolia boulevards. The area would be a busy center of office towers surrounded by homes and businesses. That vision fell far short. Here is a comparison of one of those 1981 proposals with how the area looks today.

1981 PLAN

2000 REALITY *

PLAN: Three office buildings with 330,000 square feet.

REALITY: One office building with 178,000 square feet.

*

PLAN: 400-room hotel.

REALITY: No hotel ever built.

*

PLAN: Five office buildings, each 6 to 8 stories, with 800,000 total square feet.

REALITY: One 10-story office tower with 160,000 square feet.

*

PLAN: Street-level mall with 230,000 square feet of boutiques, restaurants and stores, surrounded by elevated walkways.

REALITY: No mall or elevated walkway.

*

PLAN: Two 3- to 4-level parking decks with 3,015 spaces.

REALITY: One new parking deck with 1,300 spaces.

*

PLAN: Closure of several streets and construction of new street to help create a pedestrian walking and shopping area.

REALITY: No new street.

*

PLAN: More than 700 residential units, including twin towers with 320 units for seniors.

REALITY: 448 units, including 200 for seniors and people with disabilities. *

Source: CRA. Researched by T. CHRISTIAN MILLER and PATRICK McGREEVY/Los Angeles Times