Hollywood businessman criticizes redevelopment grants

Aaron Epstein, a Hollywood businessman, got an offer recently that a lot of people in his situation would have leapt at.

Hey, said City Hall, would you like a handout, Mr. Epstein? If so, we’ll give you money — as much as $200,000 — to spruce up your building, inside and out.

It’s all part of a Los Angeles Community Redevelopment Agency program to brighten up Hollywood Boulevard, and Epstein is one of dozens of business owners eligible for cash loans.

And the deal gets better.

The loans don’t have to be repaid if owners keep up their property for 10 years after getting the money.

That was not a misprint.

A small business can get $37,500 without having to pay it back, and can qualify for up to $200,000 by matching with its own funds every public dollar above $37,500. Owners of larger spaces can qualify for up to $150,000 without having to match the public money. The CRA says it has $1.5 million to give out in the first year of this program and an additional $1 million budgeted for the following year.

It’s a tempting offer. But Epstein, 81 — who was born and raised in Hollywood, and whose family used to own Pickwick Books on Hollywood Boulevard — said no thanks.

Many years ago, he gladly accepted just such a loan from the redevelopment agency. But that was back when the city wasn’t struggling. He’s incensed that at a time when municipal services are being scaled back and schools crushed by budget cuts, tax dollars are available to slap a fresh coat of paint on private property or install awnings.

“They’re offering the money even though we’re not asking for it, and it’s money that can be used for a lot of different things,” said Epstein, who owns a well-kept courtyard called Artisan’s Patio off Hollywood Boulevard, with 13 merchants.

“They’re letting teachers off; dismissing them because they don’t have the money to pay them. Our local police chief, at a community meeting, said she has to send many of her officers home because she doesn’t have overtime pay for them. My cousin is an assistant fire chief and said they’re having to close battalions because they don’t have the money.”

Fair point, if you ask me. Should we be offering loans, which are actually grants, to souvenir shop owners and restaurateurs when L.A. Unified has laid off 227 library aides along with hundreds of other personnel?

Gov. Jerry Brown tried to eliminate funding for redevelopment agencies across the state and divert their $1.7 billion in funds to other uses, including $1 billion for education A lawsuit against Brown’s plan is pending, and the Hollywood loan program won’t be carried out until the suit is resolved. L.A. Mayor Antonio Villaraigosa, meanwhile, fought the elimination of redevelopment funding while dinging Brown for not revisiting Prop. 13.

As I see it, redevelopment projects in California come in all varieties, ranging from wise investments that spur economic growth and benefit all of us, to scandalous giveaways that never pay off for anyone but insiders who really know how to milk the cow.

Where does this one fall?

I called Madeline Janis, a member of the redevelopment authority in Los Angeles, and she defended it on a number of levels. For one thing, she said, you don’t have to be a well-connected hotel operator or mega-project developer to qualify for the money. This so-called conditional loan program is available to mom-and-pop merchants along a still-struggling stretch of Hollywood Boulevard that sits between the big developments at Highland on the west and Vine on the east.

As the argument goes, if those businesses become more attractive, more businesses and more shoppers will show up, and the new cash streams and added tax revenues will benefit everyone in the city. Also, Janis said, the recipients will have to sign a contract committing to job creation. No additional jobs; no money.

But wait a minute, I told Janis. I was looking at the CRA’s own description of the program, and there was no mention of jobs. Other than the temporary jobs that would be created during building improvements, there was nothing.

If that’s the case, Janis said, she would have opposed the program. Scarce public money has to be spent wisely and very strategically, she said, rather than willy-nilly and piecemeal, as has sometimes happened in the past. And in this environment, job creation has to be paramount. She said the CRA board had discussed that very thing before approving the program.

But when I checked with the CRA’s David Bloom, he said no property owner would be required to create new positions in return for money. And then on Tuesday morning I attended a meeting on the loan program in the CRA’s Hollywood office — attended by a dozen business owners interested in cash payouts — where project director Neelura Bell confirmed what Bloom had said.

Janis wasn’t ready to give up, though, and later Tuesday morning she emailed asking me to call her for an update. She missed the board meeting at which the Hollywood loan program was finalized, but after expressing her concerns Tuesday, the CRA decided to modify the terms of the deal. Recipients of $100,000 or more will now have to create jobs in return for the money. A merchant who gets $105,000 would have to provide three new living-wage jobs and maintain them for a period of two years.

That sounds better. But later Tuesday morning, while strolling Hollywood Boulevard with Kerry Morrison and Joseph Mariana of the Hollywood Entertainment District — big supporters of the loan program — I began having new doubts.

So many of the businesses look so shabby, $1.5 million would barely make a visible difference along a several-block stretch. And Morrison has been frustrated for years at the refusal of owners to clean up their properties. So why reward that resistance with a handout even if it would create a few jobs?

This is an era of tough choices, said Epstein. Lending a hand to a souvenir shop owner or fast-food eatery doesn’t make much sense to him.

And if this is truly about job creation, he said, what about using every bit of available money to send laid-off teachers, librarians and public safety people back to work?

steve.lopez@latimes.com