February 28, 1992 - From the February, 1992 issue

Point-Counterpoint: CRA and USC Square Off on Downtown’s Future

The Los Angeles Headquarters City Association has released a study, Los Angeles: At An Economic Crossroads, commissioned from The Planning Institute at the School of Urban & Regional Planning of the University of Southern California. 

The report argues for a review of taxes and regulations that may be driving businesses out of California, proposes a residential capital gains tax as an alternative to a housing linkage fee, and states that growth controls may be “a luxury that we can no longer afford.”

Of all the report’s recommenda­tions, its critiques of the City of Los Angeles’ downtown strategies has drawn the most attention. To shed light on the future of Los Angeles’ downtown, The Planning Report presents in point-counterpoint format excerpts from the report, written by USC authors Harry W. Richardson, Peter Gordon and Genevieve Giuliano, followed by counter-argu­ments from Community Redevelop­ment Agency Administrator Ed Avila.

The Planning Institute, USC: 

The City of Los Angeles has assumed a largely passive role in promoting (or repelling) economic development, with the notable exception of downtown Los Angeles. In this case the CRA and other agencies of the City of Los Angeles have intervened via a complicated mix of incentives, tax levies, regulations and negotiations to bring about a significant change in the downtown skyline. Leaving aside the issue of how much of this development has been spontaneous (i.e., would have occurred without the actions of the CRA), it seems reasonable to ask whether this intervention has paid off. 

Regardless of the extent of the skyline change and aesthetic judgments about the architectural qualities of the new “trophy” buildings, several conclusions are inevitable.

…The downtown “revival” is not the key to the region’s recent economic success. The pace of decentralization has continued unabated, and the most dramatic economic growth has occurred in the region’s peripheral counties.

… The rate of employment growth in downtown has been only about one-third of the county’s growth rate and only 22 percent of the region’s growth rate. Downtown growth, therefore, does not represent a regional redistribution of jobs in favor of the CBD. 



Downtown redevelopment is not in conflict with re­gional growth. It was intended to address the seriously blighted conditions that had emerged in its heart that were a clear and present hazard to the health and well-being of that community and, by extension, the city as a whole. 

By the late 1960’s, it was apparent that other parts of downtown Los Angeles also suffered from obsolescence, blight, and deterioration. Businesses were relocating from downtown, in large part because of its deterioration. Assessed valuation was not increasing in pace with the rest of the city or county, and in some areas such as Central City East, they were declining. 

Redevelopment has transformed Bunker Hill from a hilly residential slum in the 1950s to a modern “city within a city” today where assessed valuation has soared from $20.3 million in 1959 to more than $2.67 billion in 1990. Likewise, the Central Business District — on the brink of evaporating when redevelopment got underway in the mid-1970’s — has experienced a 464 percent gain in as­sessed valuation from $1.4 billion in 1975 when the redevelopment plan was adopted to $7.9 billion in 1991. 

The Planning Institute, USC: 

… Much of the economic transformation of downtown is internal to downtown itself. In other words, as new office buildings are added to the stock, a filtering-up process takes place which eventually results in an emptying out and abandonment of marginal office space on the downtown periphery. From this perspective, the new trophy buildings accelerate the process of core city blight.


It is a misstatement to suggest that much of the economic transformation of downtown is internal, that the trend of office tenants moving up to newer buildings has facilitated blight. During the past 12 years, the additional office space that has been absorbed downtown has had three primary sources of occupancy, each representing roughly a third of the total:

  • Expansion or activities already in downtown;

  • Relocation of activities from elsewhere in Southern California into downtown; and

  • Additions of activities which are new to Southern California. 

Thus, some two-thirds of downtown’s expansion is from external sources. To suggest that the “filtering up” to modern buildings downtown is accelerating blight is fallacious. While some older buildings downtown are functionally obsolete, many are being recycled to meet modern needs. Among them are the venerable Fine Arts, Heron, and Pacific Mutual Buildings and the landmark Bradbury Building. In fact, a perfect example is the CRA’s own headquarters in the historic Hellman Building on Spring Street.

The Planning Institute, USC: 

… The attempt to create a “jobs-housing” balance within downtown has been almost a total failure, and the number of housing units added has not even kept pace with sluggish employment growth. As a result, the jobs-housing ratio in downtown is not only by far the highest in the region but has in fact become even more “imbalanced” in recent years. 



In criticizing the jobs-housing balance downtown, the report fails to reconcile the fact that since inception or redevelopment activities, CRA has brought about the development or preservation of 10,000 dwelling units downtown. Nearly 6,000 of these are newly constructed housing units and, of these, almost half are affordable to very low, low and moderate-income households and/or elderly or handicapped persons. 

There has also been a sustained effort to save and renovate the stock of aging residential hotels, often the last refuge between the would-be homeless and the streets. To date, more than 3,500 such units, with monthly rents averaging about $200, have been rehabilitated or funded for renova­tion downtown. 

These numbers also don’t include more than 5,000 affordable housing units built or rehabilitated in adjacent or close-by Greater Downtown communities such as Chinatown, Boyle Heights, Lincoln Heights, Pico Union, or nearby areas of South Central Los Angeles where CRA is making major investments in community improvements. 

The Planning Institute, USC: 

… Downtown Los Angeles has only 11 percent of Southern California’s rentable office space but one-third of all the space under construction. Even with a projected absorption rate 85 percent higher than in the recent past, downtown Los Angeles will have 5 years of excess supply, a fact that is likely to push vacancy rates upwards from about 20 percent towards 30 percent by 1993-4. 

… CRA’s preoccupation with downtown has not led to a wise allocation of both funds and managerial resources. 

To the extent that the City of Los Angeles has pursued a consistent strategy over the past twenty years, this strategy has been based on the idea that downtown revival is the key to improving the economic performance of the city and perhaps the region at large. This strategy has strongly influenced CRA policy and has induced the heavy downtown-oriented mass transit investments. These investments have not only been very costly, but they should not be regarded as any kind of panacea for the problems of the central city.

For example, whereas local officials have pinned their hopes for rail transit success on the development of Los Angeles’ many centers (the so-called “Centers Concept”), a USC study has determined that most trips are not between centers but rather between centers and their surroundings. This finding reflects the experience in other U.S. cities and helps to explain the poor performance of their new rail systems. Only 13.5 percent of trips in the Los Angeles region leaving centers go to other centers, and only 6 percent of trips arriving at centers began in other centers. Many trips (53 percent of departures, 41 percent of arrivals) are either inter­nal to the centers or to and from the surrounding area, while 33 percent of departures and 53 percent or arrivals are to and from highly dispersed locations. 



The Metro Rail system, approved by voters in 1980, is the backbone of a multi-modal transportation network ranging from long-distance commuter rail, Metro and light rail lines, to express and local buses, community shuttle services, van and car pools, and improved sidewalks for pedestrian usage. 

Singling out the rail mode as not serving a large enough percentage or total trips is both short-sighted and erroneous. Remember that more than 300,000 commuters work in downtown and a high-density transit system such as Metro Rail is essential.

The Planning Institute, USC: 

Spontaneous investment in downtown should be en­couraged, but there is little rationale for using scarce public sector resources there. Redevelopment efforts at locations outside downtown would have a high payoff, especially in areas where infrastructure deficiencies are modest. Strategies for the transportation sector that emphasize deregulation of local transit operators, facilitate the expansion of paratransit, and emphasize parking management via pricing would benefit many more people than the costly mass transit approach and are very cost effective in terms of public sector resources…

… Investing public resources in downtown revival in the form of subsidies for commercial development, mass transit, and the arts offer very limited prospects for improving the relative economic influence of the central city. The forces of decentralization remain very strong and the task for central city policymakers is how to ensure a gentle process of decline, certainly in relative and possibly in absolute terms. 



No responsible policy maker could advocate a policy of decline and it would be reckless to abandon downtown Los Angeles because it is the cultural, civic and commer­cial center of the region. Within five miles of City Hall live one million people; within ten miles live many millions more. Three hundred thousand people work within the Central Business District and its adjacent areas and 300 corporations are headquartered downtown. Los Angeles’ entire transportation system focuses inexorably on the central city. Dozens of museums, recreational facilities, theaters, courts, parks, cultural and educational institutions, including USC, lie within close proximity to this core. 

For every dollar that the City of Los Angeles has spent in furthering its work downtown and throughout the city, the private sector has responded with up to ten dollars. 

To abandon downtown at a time when it is beginning to pump economic and cultural lifeblood throughout the city would be to risk atrophy not just in our core but in our suburban limbs as well.



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