With economic development being the central theme for all California cities, The Planning Report took the opportunity to interview the administrator of the Los Angeles Community Redevelopment Agency to assess the viability of the public sectoring reinventing itself.
The Economic Revitalization of Los Angeles appears to be a dominant mission of the City Council and the new Mayor; is it now the dominant mission of the Community Redevelopment Agency?
The Agency has at the heart of all its activities, economic development; but we focus on blight geographically, limited by law to our seventeen Council approved redevelopment project areas. Our expertise is not extended presently to the whole city or the region. We do get requests from every council district asking for at least some technical assistance. But the question remains, how do we best contribute to the City's revitalization efforts?
There has been much talk over the years of the need for a coherent economic development agenda. The City, in my opinion, has to have a vision first. We at CRA, this January, proposed a strategy; it need not be the strategy. It's premise was that localities could positively impact their economy if they learned from the past mistakes of other public efforts, and if they let private sector industries with promise lead and public sector institutions flexibly respond with tailor made packages of incentives.
Additionally, after meeting with four general managers (from Housing, Planning, CDD and CRA) over 8 months, we also developed an organizational strategy for implementation. The CRA was suggested as the proper agency for the implementation of an economic development strategy because it had useful tools and organizational expertise.
The General Managers' proposals would require the development of a new "box" within the CRA's organizational chart, and would imply that what we do within redevelopment areas can also be done citywide. By organization capacity, I mean the requisite functions needed for a comprehensive economic development program, including such things as: strategic planning, marketing, incentives to retain and attract business advocacy, property development and creative finance. And, most importantly, the ability to respond rapidly to assist business in need of help and to package and negotiate deals.
A good example of what the City and Agency could accomplish throughout the City is represented by our success with Downtown's Bullock's store, which was going to leave Seventh Street Market Place. I called the Macy's operation in New York and sent a representative there. We legally could offer incentives; it wasn't just, "please stay." We provided a combination of $90,000 in CRA funds and $600,000 in parking revenue funds from the Ninth Council District to improve accessibility to the Seventh Market Place for potential shoppers. We also developed incentives for Prudential, the property owner. Packaging these incentives convinced Bullock's to remain in downtown Los Angeles.
Also, we must coordinate and better leverage the City's resources, in particular those of that drive the economic engines of the City -- DWP, Airports, Harbor and CRA -- to truly have an effective economic development strategy. There has to be coordination citywide and that can only be done, in our opinion, from the mayor's office. We proposed the creation of an economic development executive, with the CRA as the implementing arm. It's different from a deputy mayor because we propose that this individual be confirmed by the council. It's going through the Economic Development Committee right now.
In summary, the four general managers concluded that we need to both generate new resources and more effectively and equitably target resources to achieve genuine economic development. Without a citywide strategy we will continue to fight divisive battles over an ever diminishing pool of resources.
The wherewithal of the Agency to accomplish economic revitalization in the future depends, don't you agree, on whether the Cap can be lifted. Can it?
The Agency is developing a program proposal that's reasonable for all of the taxing entities affected.
Without agreement, there's very little hope that the cap will be lifted. So the crafting of that proposal is critical.
It's a complicated process because there are so many people involved: there are 15 Councilmembers, the Mayor, five members of the Board of Supervisors, 7 members of the Board of Education, seven CRA Commissioners, a judge, plaintiffs (only Councilman Bernardi remains, who I'm sure will be vehemently opposed to lifting the cap). So, we'll have to have a compelling argument on the other side. There's going to be a nexus established over the next several years where there will be some sharing with the city, with some tax increment money being used to offset general fund programs like debt service, which we can do legitimately. We're talking about things like homelessness, child care and schools. We believe that a proposal can be developed that will be mutually beneficial to all the concerned parties and will help to meet some of the most critical priorities facing the City.
What's the relationship between your economic development strategy and the new riot recovery area zone.
We are looking at the areas of civil disturbance as potential redevelopment project areas. Our approach, as I promised the Council, will not be proscriptive, but rather responsive to community needs; we are economic consultants to the community and the community's recommendation may or may not include redevelopment. We will come out with a proposal which the community will help craft saying, "This is what we want. "A lot may say redevelopment is not what we need or want here, and it may not be feasible here . But at least they will have developed a strategy for their own community, which may involve enterprise zones, commercial developments, community center housing or mixed use development, or other forms of revitalizations.
Unless this agency is successful on the economic development side we cannot do anything else. All its resources come from the success of economic development efforts; tax increment funds needed social programs. The only reason we are talking about 60-70 million dollars from the CBD is because we've been successful in developing the western end of the CBD. So now we have resources to put into historic buildings and restoration, homeless programs and all that good stuff. Similarly, a good chunk of 30 million dollars a year from Bunker Hill has financed over 14,000 low and moderate income housing units for families in this city.
The council committee that oversees the CRA is going to be renamed the housing and community development committee. What does that portend for the role of CRA in concert with the other city agencies that deal with housing?
They are changing the name because they are recognizing the importance of housing. But the fact is that this agency recognized the importance of housing long ago. We are the largest housing agency in the city. We are committed to using 50 percent of our resources for housing, above and beyond the 20 percent state law requires. The issue really is consolidation and whether it's a good thing to do.
Our position is that because of our community-building mandate and our ability to adjust to circumstances, it's important to maintain the housing function that the agency now has. Not that it shouldn't be coordinated - everything should be. But programs are driven by their funding source. And the funding source for us is tax increment, locally grown and locally controlled. Federal Funds, on the other hand, are the source of Community Development Block Grants. These dollars are federally grown, controlled and highly bureaucratized. Because of federal requirements on what local government does with the money. I don't think mixing funding sources makes any sense at all. It's understandable that most people would fail to appreciate the nexus between funding source and housing product. Housing is an vital part of community-building mandate of the Agency. We'd done it well in the past. Why fix something that ain't broken?
Let's talk about the sale lease back of the Library as a case study of the creative financing capabilities of the Agency. What can we learn from this transaction?
It was 70 million dollar, time sensitive transaction involving the purchase of tax credits arising from the sale of the historic Godhue building.
The deal is: an investor purchases the Goodhue building for the tax credit benefit The city then receives immediately 70 million. There is a requirement we have to pay back a loan from the Port Authority of 10 million dollars and set aside money to buy back the library in the future. The immediate realization to city in terms of cash up front is going to be about 47 million dollars. It will be used for the general fund and other purposes. It's a win-win situation. Because of changed federal tax laws, this is a one-time only deal.
Without the agency's power, we couldn't do it. Just like the convention center wouldn't have happened without the agency. If you look at the agency as a tool to be utilized, then you see the agency in a very different light.
What's the future of retrofitting historic core buildings as housing in the next several years?
It's a high potential area. With the completion of the Grand Central project, people will see what you can do with a formally commercial building in terms of conversion to housing in a mixed-use project. And the funding is a prototype too: a public-private partnership with the CRA and the MTA involved in a major way, along with the Yellin company which has invested many millions of dollars. And we will continue developing housing with non-profits.
What's the impact of a new Mayor and Council Committee Chair on your agenda and operations?
In the next six months, it means an enormous amount of orientation and communication and education for the new commission era, developing a relationship with the mayor's office. It's a major transition for the city. I'm confident people will realize this agency's capacity to deliver for the city.
For example, when the civil disturbances occurred, within literally a few days, the agency had readjusted its priorities, had shifted resources and created a grant program for small businesses to reopen immediately. Once the council approved it, we were turning loans around in six to ten days. We reopened 92 businesses, the ones most at risk. That's what I mean by our ability to adapt and react quickly. We got very little credit - all you heard about was people having trouble getting Small Business Administration loans.
There are a lot of people who are working today because of us. We got calls from all over the city, but we could only do it in our geographic areas. Another example: once the council directed us to implement this recovery strategy, within 10 days I had reshuffled the agency. I don't know of any bureaucracy that could do that. That's the nature of locally grown funds and a function of being noncivil service. We can adapt and react quickly.
Why do you think the two Tucker bills were defeated and what kinds of changes need to be made in state law to realize the potential of CRA's?
The Tucker bills - they lost What they wanted to do, we're doing, and far more efficiently because we have the mechanisms and funding available. The last thing we need is another bureaucracy. Not only do we have the capacity but, contrary to some misimpressions, we have widespread community support from respected leadership. The recovery program is testament to the depth of support for this agency; and we are receiving requests to look at even more areas.
What can the city and agency do to defend against smaller cities within the region that are trying to cherry pick our industries as well as grow them?
We need an aggressive citywide economic development strategy and program. First, we have to assign responsibility to the functions of job retention and job growth. Right now, it doesn't exist. We perform this function within our project areas, but we need to find ways to provide those services citywide. You have to focus on industries that are going to grow, like the garment industry or the toy industry or biotech. There has to be an agency that has the authority to compete to retain and expand key growth industries and negotiate on behalf of the city. With our Hollywood loan program, we provide matching grants if they promise to stay for 10 years. We have to have someone to do that citywide.
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