LA’s CRA turns gold into straw - a view from the street

CityWatch, Feb 1, 2011
Vol 9 Issue 9

When Governor Brown met with Mayor Villaraigosa to debate the future of LA’s Community Redevelopment Agency, the meeting took place in the well-appointed digs of the State Capitol, surrounded by a formidable security force.
When the people in my neighborhood gathered to discuss LA’s CRA, the meeting took place on a busted sidewalk, outside the now empty five-story Gershwin Hotel, across the street from an empty lot surrounded by chain link fencing and graffiti. Security was a courtesy provided by the Department of DIY.

The Governor’s plan to phase out approximately 400 redevelopment agencies throughout the state and to return the revenue stream to local authorities for use in the community has prompted LA’s CRA to scramble in an effort to squirrel away $930 million of public money.

LA’s CRA contends that they have done good work resulting in a catalytic economic and social impact on the community. That may be true in the sense that building a development for $600 million and then selling it for $200 million has a catalytic impact on the CRA’s political cronies.

LA’s CRA argues that the redevelopment projects create jobs and stimulate the economy. That my be true in the sense that bulldozer operators have been busy razing buildings that have fallen victim to the CRA’s “induced-blight” scheme but not for the business owners and employees who have lost jobs through eminent domain.

Jean Ros, founding executive director of the California Budget Project challenges the CRA’s claims saying "The research shows that redevelopment doesn't give us the bang for the buck we need in these economic times."

The Public Policy Institute's study "Subsidizing Redevelopment in California" compared 114 different redevelopment project areas statewide to similar areas without redevelopment. It concluded that redevelopment agencies were not responsible for any net economic growth and that they were being financed at the expense of local schools and public services.

As for local data on the systemic effectiveness of LA’s CRA, Jim Dantana, Deputy to CRA’s CEO Chris Essel, acknowledged that there is no real data to support either side of the argument.

Last week, California State Controller John Chiang launched an audit of 18 redevelopment agencies around the state to get to the bottom of the debate over whether they're "engines of local economic and job growth or are simply scams providing windfalls to political cronies."

While many argue that we simply don’t have the evidence, it’s not quite true. As LA’s City Controller Wendy Greuel warily dips her toe in the audit waters, the simple fact is, she’s late to the game. The audits have been performed, 11 years ago by then-City Controller Rick Tuttle and 5 years ago by then-City Controller Laura Chick.

Meanwhile, on the streets of Hollywood, locals are left with the anecdotal evidence that the CRA’s presence can have a chilling impact on the community, one that results in businesses closing, residents leaving, buildings falling into disrepair, public nuisance abatements and...bulldozers.

The suspicion that the presence of the CRA not only induces blight but actually discourages the investment and participation of long term small business operators was most recently confirmed when Glendale hotel owner Ray Patel refused to sell his property to developer Rick Caruso, only to find himself facing an eminent domain action that will allow the American to expand using his land.

Matt Middlebrook, former Deputy Mayor in LA to then-Mayor Hahn and current frontman for developer Rick Caruso, defended the aggression and explained that Patel had no right to resist the seizure, after all, “Patel (hotel owner) knew a decade ago that he was buying a business inside a redevelopment zone. By that time, the city had already used eminent domain to push out small Glendale property owners and make way for other private owners.”

That’s the skewed logic at the core of LA’s “pennies on the dollar” scheme, one where the CRA spends the public’s dollars on projects that wouldn’t pass muster in the private sector, then sells them to insiders for pennies.

LA’s CRA built the Hollywood & Highland Center for $600 million and then sold it to the CIM Group for $200 million. The City of LA then ponied up an additional $30 million to remodel the Kodak Theatre for the CIM in a move that Curbed LA referred to as “Send in the Clowns!”
Meanwhile, as Hollywood’s Gershwin Hotel continues to decay, the CIM Group stands in the wings with a bag of pennies, ready to feed at the public trough on the land and property that has been secured with our dollars, all while the local children stare through chain link fencing at a building that has more broken windows every day, at a neighborhood that continues to suffer. If only the CRA would get out of the way.

(Stephen Box is a grassroots advocate and writes for CityWatch. He can be reached at: Stephen@thirdeyecreative.net. Disclosure: Box is also a candidate for 4th District Councilman.)