Council Orders More Study, Hearings on CRA Takeover

The Los Angeles City Council balked Tuesday at a proposal to take over the Community Redevelopment Agency, ordering both more study of the agency’s beleaguered finances and hearings to address strong objections from downtown business interests and unions.

With many council members doubtful on taking over the financially troubled and politically unpopular CRA, the council postponed action for 60 days and voted instead to create a task force to review the proposal, which is a key element of a plan to overhaul the city’s economic development programs.

The agency faces an $8-million deficit next year--up to $40 million over five years--and has had to cut its work force from 350 to 210 employees because property tax revenue dried up in the recent real estate downturn.

Unions representing CRA workers also voiced concern that jobs may be cut further.

Union leader David Cochran said there is fear that the mayor wants to cut the work force by 30 to 80 employees. The mayor’s office did not return calls for comment.

“The last thing in the world I want to be is a CRA commissioner,” Councilman Hal Bernson said. “I know the intentions are good but let’s not become the focal point of all the criticism and all the problems of the CRA.”

The council voted 11 to 3 to direct its staff members to prepare for a takeover and consolidation of the city’s far-flung economic development programs into a new Economic Development Department.

With business leaders complaining they did not have enough input into drafting the plan, the council voted to create an ad hoc committee of council members and to meet with business leaders to hear their ideas.

The CRA takeover plan drew concern from downtown business leaders, including representatives of the Central City Assn. and Los Angeles Chamber of Commerce, many of whom said the CRA is working fine now.

One concern is that the new Economic Development Department may lose focus on downtown business development, which represents a major portion of the commercial tax base of the city.

The city should consider creating a downtown development corporation to work within the new structure, said Carol Schatz, president of the Central City Assn.

Some business leaders also are concerned that having the council take over the CRA could increasingly politicize the process of redevelopment, leading to decisions based on how they affect individual council districts rather than the city as a whole.

“Project planning [could be] replaced by delay tactics and backdoor jockeying,” downtown broker Ed Rosenthal said.

The majority bloc of council members who said they might eventually support the CRA takeover is very shaky, and could fall apart under heavy lobbying by business leaders and Mayor Richard Riordan.

Under the proposal, which was eight years in the making, the new department would take in the economic development activities of agencies including the CRA and Community Development Department. The council would declare itself the governing board of the CRA, supplanting a commission appointed by the mayor, but would appoint a new advisory panel to assist it in overseeing the redevelopment activities.

The CRA’s housing development functions would be transferred to the Housing Department.

Consolidating economic development functions would provide better focus to the city’s efforts to attract and retain businesses, supporters said during a 90-minute hearing on the issue Tuesday.

“Putting it together and spending some time on a real strategic plan and having some focus to this . . . are real positive steps,” Councilwoman Jackie Goldberg said.

The agency would be more responsive if it were under more direct control of publicly elected officials rather than appointees, supporters of the change said.

“We want to make it more accountable,” Councilman Rudy Svorinich Jr. said. “We want it to run better. It’s only one part of the economic development program.”

Bernson was joined by council members Nate Holden and Joel Wachs in predicting dire consequences if the council declares itself the CRA, saying the agency faces the $8-million deficit next year and debt totaling $630 million.

“I don’t think there is any question that we need to better coordinate and consolidate economic development functions,” Wachs said. “But I have really serious questions whether taking over the CRA is the answer to that.”

Holden called the proposal an ill-conceived “power grab” by the City Council, while Wachs said he fears the action could lead to the city bailing out an agency he said is “perhaps” headed toward bankruptcy.

“I really fear that we are going down a path that could cause great harm to the the fiscal integrity of this city,” Wachs told the council.

Wachs said the council would feel obligated politically to use the city money to bail out redevelopment operations, especially if the alternative is to lay off employees.