May 30, 1994 - From the May, 1994 issue

TPR Roundtable: Riordan Merger of Housing Agencies Assessed

Mayor Richard Riordan's first budget proposes major reorganizations for how affordable housing and economic development strategies are to be pursued by the City. The proposed Citywide Development Agency (CDA) would incorporate the existing functions of the three-year-old L.A. Housing Department, the CRA and certain functions of the Community Development Department. In response to Mayor Riordan's proposal, The Planning Report sponsored a roundtable discussion with Dora LeongJan BreidenbachNancy LewisKen BernsteinKen Gregorio and Deputy Mayor Rae James to examine these important changes and to help understand the issues at stake.


“Regarding community input, as far as I know, not one member of the Southern California Association of Non-Profit Housing was solicited for input to this reorganization plan.” - Jan breidenbach

Dora Leong, Legislative Asst., Councilman Mark Ridley-Thomas

Efforts to consolidate all the city's economic development functions into one entity began about 18 months ago when Councilman Mark Ridley­Thomas under the auspices of the Community & Economic Development Committee (CED), which is presently chaired by Councilman Hernandez, started looking at the idea. 

Since then, city staff have been looking at the feasibility of various consolidation proposals for the economic development functions performed by City departments and agencies. As an aside, when City Council finally approved in concept the consolidation of economic development functions of the Community Development Department (CDD), the Community Redevelopment Agency (CRA), Mayor's Business & Economic Development Office and the Business Retention Program in Public Works last fall, they also decided look into consolidating the housing functions and the various services departments into one organization. But that was a feasibility study to be done at a later time. 

In February, there was another joint meeting with the Housing and Community Redevelopment Committee, now chaired by Councilman Ridley-Thomas and Councilman Hernandez's CED committee. They asked city staff, and the general managers of the RA and the Community Development Department, to work on the organization plan and the budget for consolidating the two departments. Again, housing functions were on the back burner in terms of the feasibility study. 

What has happened since February? The Mayor's office asked to coordinate these activities in order to be more involved with the process,  and the committee chairs agreed. Staff as directed to come back in sixty days with an ordinance to consolidate the two departments as well as some of the functions of the Mayor's office and the Board of Public Works. Until a short time ago, the committees hadn't heard much from the various staff offices. 

Much to our surprise, the Mayor's office came out with a brief verbal plan that was larger in scope than what the two committee chairs had envisioned. In the original proposal there was no discussion about including the Housing Department into a larger city-wide development agency. Again, the thought of the committee was, to look at the feasibility of consolidating all the housing functions into one housing agency, not to put it under a citywide development agency. 

That's why we've had joint-committee meetings the last two weeks, to ask the Mayor's staff for more information as well as the various staff and affected departments (CRA, CDD, CLA and CAO offices) for input I think the feeling of the committees is, that the Mayor's office basically took off on its own. As a result, instead of taking a lead role as envisioned by the Council, the CLA's office has been involved only in presenting the plan to the committee. 

One of the concerns Councilman Ridley-Thomas has, is whether housing functions should be incorporated under a city-wide development agency. He is not certain it's a viable option relative to the housing needs of the city. Another concern is that the organization plan proposed by the Mayor's office is only a two-year plan, in the first year the CRA staff would join the Housing Department, then next year the combined staff would work under the Citywide Development agency. One interesting problem is the personnel issue, particularly related to retirement, in that the Housing Department is covered by a civil service program, while the CRA retirement system is entirely different. So what happens to CRA and Housing staff when one year they move to the Housing Department then the next year they all move over to the new Citywide Development Agency? These are just some of the initial concerns and comments of Councilman Ridley-Thomas.

Regarding community participation and studies of existing models, when the City Council decided to move forward with studies on consolidating the City's economic development functions, it conducted extensive research through the CLA's office, which included surveying other community development commissions statewide to understand how they function and are funded. That study showed putting economic development under a community development commission worked, but whether or not housing functions also fit under the umbrella of economic development had mixed reviews. 

This is why the City Council decided to go forward with the economic development consolidation but decided to look at housing functions more carefully. For instance, one housing issue has to do with funding, State law requires that the CRA set aside 20 percent of its funds for affordable housing but the CRA has traditionally exceeded the 20 percent set-aside. So what happens if the CRA housing functions are moved into the Los Angeles Housing Department? The 20 percent set-aside dollars will move over but most likely the excess dollars that traditionally went to fund affordable housing would be used for other economic development strategies, resulting in an actual net loss of housing production funds. I can't imagine the economic development commission allocating more than the required 20 percent set-aside.

Finally, there is the important issue of accountability. In the joint meetings of the Housing and Community Redevelopment Committee, and the Community and Economic Development Committee, a motion was approved directing the CLA's office to study the feasibility or the Council City becoming the oversight entity for the new department. I know the Mayor's office is proposing anew 9-member commission, but in most California cities the City Council is the oversight agency.

Jan Breidenbach, Executive Director, Southern California Association of Non-Profit Housing:

Non-profit builders of affordable housing have a series of questions regarding the consolidation proposals. 

We have some builders who think the housing functions of the CRA would be better served if they were in the Housing Department, and others who believe the departments should be separate. The difference has to do with which agency people have worked with, and I can't say now whether or not we’ll have consensus on if the functions should be consolidated. Both entities do housing, but that is all they do which is similar. They construct housing in very different ways. For instance, the two departments use very different funds - tax increment vs. federal funds; the CRA works in redevelopment areas and there are probably areas of the city where the Housing Department could get a project built but the CRA couldn't, because of neighborhood opposition to issues such as eminent domain.

I think there is real consensus that the proposed citywide development agency, combining housing and economic development, is not necessarily a good idea. Even though they might be targeting the same neighborhoods, in many ways you are targeting different constituencies. For instance, if you have just one agency whose administrator is more interested in housing than economic development or vice versa, than one or the other is going to suffer.

We think an economic development department in this city would be very useful, it would elevate economic development as a city priority. But within that concept there is a whole host of policy decisions: are we going to focus on micro-level economic development, business retention or industrial development? We have very strong feelings on this subject which will come out as the affordable housing community puts together its response.

I think the coordination is important, but there are other ways to achieve coordination besides having everything in the same department.

If you had an Economic Development Department and a Housing Department, whether it was separate from a redevelopment/housing agency or not, there is nothing that prevents regular meetings between commissions with specific agendas and presentations so they can learn about the policies and procedures from other departments. I founded and administered an economic development corporation and presently, I'm the director of a housing organization, and while I see the crossovers, there are also differences. My experiences have shown that the policies are both the same and different.

Regarding community input, as far as I know, not one member of the Southern California Association of Non-Profit Housing was solicited for input to this reorganization plan. And many of our members do both housing and economic development. There could have been some very critical discussions but no one was asked to participate.

More importantly, if you want to promote affordable housing in this city, why has the Density Bonus ordinance, which would reduce parking requirements for affordable housing developments, been languishing in front of the Planning Commission for one year? The developers will tell you it works, low-income people have fewer cars, and you'll save $10,000 per unit. One of our projects uses the extra parking as space for kids to roller skate. That's one expensive roller rink! Where is the push, why isn't the Mayor's office fighting for the ordinance if they really want to reduce costs? 

Another interesting point is that there is a movement going on statewide to shut down old redevelopment areas. In last year's community redevelopment reform law AB 1290, we lobbied for language to keep Bunker Hill as a redevelopment project because it's such a cash cow for housing production. If the housing functions are moved out of the CRA, Bunker Hill will almost certainly get shut­down. 

Ken Bernstein, Planning Deputy, Councilmember Laura Chick: 

Some people view this consolidation as the dismantling of the CRA, while others see it as consolidating all the current programs into the existing CRA - I think you can look at the consolidation from different perspectives, depending on where you sit. 

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Councilmember Laura Chick feels it's important to define both an economic development agenda and an affordable housing agenda, and to understand the interplay between the two. It's healthy to have a conversation on consolidation, and Councilmember Chick is generally pleased with the Mayor's budget numbers and most of his budget priorities. The question will be whether the substantive consolidation with the other departments and the various city functions makes sense. 

The West San Fernando Valley is an area that traditionally has not had a strong interest in affordable housing but that has begun to change. For instance, Councilmember Chick has made affordable housing one of her priority areas, recognizing the increasing needs in communities such as Canoga Park, Reseda, and parts of Van Nuys. 

At this point, Councilmember Chick is keeping an open mind as to whether or not consolidation is a good idea. We still have several questions, the most important ones having to do with operational issues such as whether it will be harder or easier to do affordable housing projects in this city. 

There will be a new nine-member commission superimposed on the existing structure does that mean an additional layer of review of projects which means more time and money? Presently, you can take a project to a loan officer at the Housing Department and when the process is working well, it gets through the process fairly quickly to the City Council. Will this new structure mean additional delays? What will be the level and focus of expertise of the commission members? Will they have the time to set both an ecooomic development strategy and an affordable housing strategy for the city? 

A piece of this puzzle that we haven't seen yet, but should be forthcoming, is the proposal from the Development Reform Committee, chaired by Dan Garcia. It will be interesting to see how everything we are talking about in the budget fits into the proposals being considered by his committee. The consolidations are greatly affected by streamlining, Building and Safety processes, and planning processes. One of the most important consolidation efforts would be for the Planning Department and the Department of Transportation to work together to reduce their conflicts such as when demands for street widening and moving traffic run up against the interests of pedestrians.

I’m not sure a holistic approach is necessarily preferable considering how fundamentally different the problems really are. While economic development and housing are related, there is an advantage to having separate departments that can really focus on their specific missions. 

Nancy Lewis, Nancy Lewis & Associates, Affordable Housing Consultant: 

I think one of the biggest concerns my clients have with the proposal is that so much is unknown. The users of both departments look at them as having very different corporate cultures. They approach things differently, each with their own strengths and weaknesses. There is a real fear that in combining the two departments, the departments will lose their strengths and only their weaknesses will survive. 

Often in a consolidation process, the most conservative aspects survive, and the more aggressive implementation and policy making features of a department disappear. Given the short time to work out these potential clashes in attitudes and approaches, simply combining the agencies won't necessarily get rid of the problems.

Given the great need to move forward, given the commitment made by Deputy Mayor Rae James to double or triple housing production over the next few years, this transition to a new agency could be a major impediment to that goal.

Much of the Mayor's budget looks at streamlining government, consolidating, reducing delays and approving projects. But I don't see how the consolidation will achieve those goals. It may eliminate duplication between departments in terms of reductions in personnel and accounting, but those are not the issues that delay development.

In order to streamline development, the city needs changes in Building and Safety, in the review process at both the CRA and Housing Department, and at the planning and zoning level.

Ken Gregorio, Program Officer, California Community Foundation:

I think that it's a good idea to look at a “holistic” approach to doing city development, whether it's the Mayor Office, City Council or whoever. Economic development has also always been part of the conversation on affordable housing and in light of the 1992 civil disturbances, that piece of the puzzle has become broader. So this notion of holistic community development that includes economic development and affordable housing makes a lot of sense.

I'm interested in understanding what the quiet on the part of the CRA, Housing Department, the Community Development Department as well as the Planning Department really means. I’m curious to hear what they think of this consolidation. But more importantly, I don't know how the community development corporations and community leaders have been involved in these discussions. It's hard to imagine that city government in 1994 would do anything as serious as these proposals without their input. I have tremendous respect for Bill Ouchi who is a good thinker on these matters, but I hope that people will come forward to see this as an opportunity to really do some creative thinking without being too defensive.

Also, the product, the end result, is really what is being sought. If in fact, affordable housing and economic development can happen concurrently and more efficiently, than that's excellent. Issues such as personnel and other administrative concerns really depends on who is leading the agency. Again, I hope that those concerns would be relatively minor compared to the larger issue of what type of neighborhood revitalization strategies are pursued.

Rae James, Deputy Mayor for Transportation and Planning, Riordan Administration:

Los Angeles cannot wait for a new vision. The Mayor's vision is balanced - it is not business development at the sake of housing. Nor is it housing without concern for overall community business support and development.

The Mayor is keenly aware of the personnel issues involved with the reorganization. Discussions regarding staff reassignments have been held with each of the affected departments, the City Attorney, the Employee Relations Unit and the Personnel Department. No employee will have a pension decision forced upon them. Each employee will be able to decide for themselves - it is a personal economic choice.

The leadership team for the new reorganization structure will be critical. The current departments already have a great deal of talent, but it will take a leader that will be chosen by the Mayor, and confirmed by Council, who will unite the vision, set the goals, and implement the work plan. Policy and control issues, by way of ordinance, will come before the Mayor and Council for review and approval. It is the combination of clear, balanced policy goals, sound leadership and legislative direction, that will chart the success of the reorganization.

Mayor Riordan has not only made a commitment, he has acted on his commitment to make city government inclusive. He does not pretend to have all the answers. He seeks the advisement and opinion of others. But someone has to make the final - and sometimes difficult decision. The recommendations from the Tennenbaum report and the soon to be released Development Reform Committee report, are efforts that support the Mayor's reorganization and will likely lead to further Mayoral recommendations to Council in other areas of the City.

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