CRA Tries to Tough Out Lean Times

The city’s Community Redevelopment Agency is strapped for cash.

Its budget is tapped, layoff notices are in the mail and CRA management is pleading with the mayor for relief.

And Mildred Weller couldn’t be happier. “Isn’t it a hoot?” she crowed.

The agency’s problems come as good news to Weller, a North Hollywood businesswoman who is part of a small but devout group of critics who complain that the CRA siphons property taxes from local governments and schools only to spend them on high-salary bureaucrats and ineffective neighborhood improvement programs.

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Weller and her fellow activists have added to the agency’s woes by launching a series of legal challenges that have hindered the once-powerful CRA’s ability to act.

Weller recently put a massive North Hollywood redevelopment project on hold with a lawsuit alleging that the CRA failed to give the public an adequate chance to speak when it dramatically expanded the project last year.

Even more troubling to the CRA is the lawsuit by former Councilman Ernani Bernardi to block it from lifting a $750-million spending cap on its downtown redevelopment projects.

In a recent series of court victories, Bernardi’s lawyers have convinced the state’s Supreme, appellate and Superior courts to reject CRA requests to lift the cap, which was negotiated nearly 20 years ago to settle another Bernardi suit.

The court cases come at a most inopportune time for the CRA, which is having to cut spending to the bone because of dwindling revenue from property taxes.

The CRA operates virtually with one income source: increased property taxes generated within redevelopment districts. Although the region’s economy is rebounding, property values continue to lag at the depressed levels of a few years ago.

“Our property taxes have bottomed out,” said John Molloy, the CRA’s executive administrator. “We are in the trough.”

The CRA’s overall strategy is to use property taxes to issue construction bonds that can help revitalize depressed neighborhoods. That tactic has been used to help build the Television Academy of Arts and Sciences office project in North Hollywood and provide a face-lift for Hollywood Boulevard near Mann’s Chinese Theatre, among other efforts.

But the recent revenue shortfalls have forced the CRA to slash its budget from $133.7 million in 1993 to $97 million this year. At the same time, the agency staff has dropped from 357 to 248. This year, Molloy has issued layoff notices to reduce the staff another 23 workers.

“We have been scoping and tailoring our programs to suit our financial resources,” he said.

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Five new recovery districts created after the Northridge earthquake and four areas drafted in riot-scarred neighborhoods have yet to generate much revenue.

Hoping for some relief from the budget woes, Molloy asked Mayor Richard Riordan last month to reduce the amount that is diverted from the CRA budget each year to pay for city administrative costs. The City Council will consider the request this week. To make ends meet, Molloy said, the agency is relying more heavily on federal grants and on partnerships with private developers, such as those interested in building a new sports arena downtown.

The problems are not unique to Los Angeles. Redevelopment agencies statewide are suffering somewhat from sluggish revenue.

“It’s indicative of the California recession,” said Kevin Mukri, a spokesman for the California Redevelopment Assn., a nonprofit group that represents redevelopment agencies statewide.

But Mukri said he suspects that Los Angeles is in worse shape because its CRA is the largest and oldest in the state and must cope with the effects of the Northridge quake and the 1992 riots.

The lawsuits by Bernardi and Weller have compounded the CRA’s financial problems by forcing the agency to spend more than $110,000 on private lawyers.

Bernardi’s suit alone has kept the CRA from raising the downtown spending cap from $750 million to a proposed $5 billion.

If the cap were lifted, Molloy said, the agency could invest in housing projects in the depressed South Park area and historic preservation efforts along Spring Street. Instead, all new projects in the downtown area are on hold.

The CRA is also planning to appeal Weller’s lawsuit, which temporarily blocks the city from raising the spending cap on the 750-acre project in North Hollywood from $89 million to $535 million.

Bernardi and Weller argue that appeals of their lawsuits are a waste of precious taxpayer money. They suggest that the redevelopment projects instead be phased out so the property taxes can flow back to local governments and schools. Private enterprise, they argue, can spur redevelopment without a massive public subsidy.

Molloy and Mukri argue that redevelopment agencies remain an important tool in revitalizing depressed neighborhoods.

But the CRA is not idling away while the court battles continue.

Molloy said the agency expects the rebounding economy to increase property taxes in the next few years. The CRA already has six redevelopment projects on the drawing board for neighborhoods from San Pedro to Pacoima, he said, noting: “I don’t view the CRA story as one of gloom and doom at all.”