CRA in Transition: An Exit Interview with Dan Garcia

Dan, when asked a few months ago by TPR what type of person you were looking for as the new Administrator of CRA, you said, "God." Now you've picked John Molloy. Does he qualify? 

We had to settle for John. We were very fortunate to find, in a single person, the experience and expertise in the redevelopment world and a true understanding of what it takes to revitalize neighborhoods. Couple that with an engaging and likable personality that isn't afraid to make mistakes but also isn't afraid to make decisions. 

From my perspective, and I think that you'll find this true of the others that you talk to—Mark Ridley-Thomas, Mike Hernandez, Richard Riordan, the screening committee and the other members of the Board—John made a very favorable impression on all of us. Given our disparate backgrounds, that was quite a challenge. I'm very pleased that we have him. 

When John Molloy, in the middle of the screening interview, presumably asked what he could look forward to in terms of responsibilities and what the agency's goals would be under his leadership and your Board, what was your response? 

In fact, the reverse was true. We asked him what he thought the agency's mission should be. His responses are quite telling. The bottom line is that the agency has tools that need to be deployed in order to revitalize neighborhoods that need help. The agency has a major role to play in revitalizing the City at a time when it badly needs revitalization. 

The current perception of the shortage of resources is part of the cyclical pattern of redevelopment across the United States during the last hundred years. We'll find a way to amplify those resources and make sure that the job gets done. John takes the long view, which is good. It's up to him to craft the vision and sell the political world that it's the right vision. He knows that. 

There are a number of governmental reorganization proposals that linger in the City Council that would affect the jurisdiction and accountability of the CRA, and you have new leadership on the City Council Housing and Community Redevelopment Committee. Our readers would be interested in knowing what you envision happening with respect to restructuring the agency?

The scope of restructuring will be modified to be much more modest than originally envisioned. We first discussed making an economic development component that included the Community Development Department (CDD), CRA, manpower training programs, private industry council, and a whole number of other components. The plan was too aggressive at the time, although the concept may have been an excellent one. For various reasons this massive reorganization didn't and won't happen. The counter­proposal to have the City Council take over the Agency didn't go anywhere, and at least currently, is dead.

What you may see is a suggestion that the City couple the CDD functions with the CRA to prevent overlap and augment the resources of both. This would effectively create, for once, the beginnings of a true Citywide economic development policy. 

I think that John feels that housing plays an integral part of the process of revitalization; it's also clear that Gary Squier wants the Housing Department to remain separate, so I don't think that you'll see that connection emerge. Thus you are unlikely to see any fundamental restructuring in the short term. 

You said last Spring in TPR: ''While we are actively engaged in expanding geographic redevelopment areas, our tax base is eroding. The agency's primary funding source—tax increment funds—has changed profoundly, and greatly reduced what I would characterize as non-committed programmatic funds for redevelopment.'' The Council is about to consider expending the jurisdiction of the CRA by approving new recovery zones for the Agency. How will the Agency fund these new projects?

We ought to begin to address the concerns I outlined in one of my prior interviews with The Planning Report. To some degree, the last year we have been in the business of lowering expectations. The reality is that the tax appeals are being routinely granted throughout the City, so that the tax base is falling; this affects the City's general fund and the CRA. We haven't resolved the CBD cap litigation yet. In the short term, the net new revenues for new projects throughout the City are much more limited than they might have been otherwise. 

But there are other things that we can do. We have a new Community Development Bank, which can be a source of badly needed capital in troubled areas. Our past reliance on tax increment financing is no longer tenable, so other local, state and federal sources will need to be explored if we really want to turn these neighborhoods around. 

The CRA is still in litigation over raising the CBD cap and the Agency and Council are scheduled to have a joint public meeting in October to also discuss raising the North Hollywood spending cap. What Is the status of these fiscal restraints on the CRA? 

The CBD matter is in court because we have been challenged in a series of lawsuits by Emani Bernardi. We have made our motion to have the court approve a multi-party agreement, which reimburses the County and school district, while we absorb some social service responsibilities in exchange for tax increment from the State. 

I really believe that when the day is done, the courts will see that it's rare to have these diverse parties agree on anything, and that the agreement is a good one. It's really a matter of how government wants the revenues to flow. There aren't any constitutional principles at stake; the technical arguments about Brown-Act violations, which are at the heart of the lawsuit, have largely been decided against the plaintiffs. I am optimistic that we'll resolve the issue by early next year and get moving. 

In terms of allocating away the CRA's funding, anyone who thinks that tax increment money can be used to offset the County's problem doesn't understand the Agency's budget. 

First, there's not enough money anyway to make much difference. Second, the County is getting fully reimbursed, as well as having the Agency pick up some of their obligations. In my view, the County came out net ahead on this, so in the long-term, unless we replenish our tax base, this problem will get worse, not better. One way to make things better is to stimulate economic development through the Agency and through private investment. 

What about raising the North Hollywood tax increment cap to $535 million? 

That is a peculiar number. The consultants from Katz-Hollis presented the $535 million as an "outer envelope" number. The assumptions built into that estimate aren't true today; thus the amount of tax revenue income likely to be realized is a fraction of the number you cited.

The real question is whether the Agency ought to stay in North Hollywood for the next 10-15 years. There has been a lot of comment, and many different views on that. I still think that there is a role for redevelopment to play there. My guess is that we may change the programmatic orientation to emphasize arts and community-based projects a little more, but there is still a need. 

Anyone who argues, by the way, that we haven't done any good in North Hollywood is wrong. Look at the shopping center on Magnolia and Vineland. Compared to what it was before, that is a wonderful testament to how redevelopment can really work. Based on the money that we've bad to spend there, we have affected some dramatic and positive changes.

The CRA was audited by the Council, CAO and CLA. One of the recommendations was that the new administrator should submit a reorganization plan within 90 days. You've had some concerns about the priorities and allocations in the budget in the past. In 90 days, what will this response look like? 

Ninety days doesn't mean much to me. The bottom line is that we need to figure out the Agency's priorities and mission are and obtain confirmation from the City Council We then need to make sure that our forces are deployed correctly to do that. 

I think John's first instinct, as related to the entirety of the CRA staff is right: If you look at the organizational chart, it's damn hard to understand. The idea that he articulated is essentially the same as I have earlier indicated—the Agency has got to be service-oriented. If you want to undertake a development project, you have to have some sense in 60 or 90 days whether the project is feasible. If it is, we need lo to then process the project in six months, not fifty. 

Since Ed Avila's era, the Agency has been moving toward economic development. What tools are available for the Agency to be able to engage economic development? 

We have far greater economic development resources than some people think. It's obviously not a city-wide function right now because redevelopment is geographically limital. Also, as we discussed previously, the Agency’s resources are not as great as they ultimately would need to be to engage in full-scale economic development.

The Agency does, however, have extraordinary powers. People tend to forget that the second half of the phrase economic development is development. There are many types of development. The role we played in the State acquisition of the Luby Building is an excellent example. 

We released a minor amount of tax liens and potential tax assessments in order to facilitate the acquisition of the building. It worked. We now have a major historical building that will be renovated up to the standards required by the State and that will add 400,000 s.f. of essentially new occupancy downtown. 

In doing so, we achieved several goals at once. We reinforced the importance of historic preservation, and we created new economic stimulus downtown. We didn't have to spend much money doing it, but our assistance to the State was critical. Finding instances like that, particularly in an era of diminished resources, allows us to really make a dent in a lot of neighborhoods. It's harder to do, obviously, in South Central Los Angeles or other devastated areas where capital investment is very limited, but we can still do it. 

The Community Development Bank was meant to be operational later this year. How is it going to interface with the Redevelopment Agency?

We want to establish some direct communication with the Bank. From my perspective, the Bank should be another place where a viable project can be directed when capital is the main impediment to the project. In some cases some of the money will be augmented from Agency resources, and so we can figure out the funding mechanism. In other cases we may encourage the parties to seek the capital directly from the Community Development Bank. 

Ultimately, I hope that the Bank's mission will be harmonized with needs in the redevelopment areas. We can help the Bank make some projects feasible. We can condemn land and we can aggregate parcels. The Agency can perform functions that can make a difference in the 8-10 percent margin that may make a project viable, particularly in up-front costs. To some extent, I think the Community Development Bank can play a supplemental role as being a financing entity to stimulate beneficial change in neglected communities. 

You were the Chair of the Development Reform Committee. Give us a status report on the recommendations, and what impact they have been having on stimulating development.. 

The implementation of the recommendations has been left almost exclusively in the hands of the Mayor's office, and specifically with Deputy Mayor Rae James. I have not followed the vicissitudes of each recommendation. Progress LA is undertaking an effort to design a review mechanism to see what the impact of the changes has been. 

My impression is that the recommendations are moving predictably slowly, although the attitude of the Council is generally positive. The response of some Departments has been cooperative, while others still live in the dark ages. When the process is complete, perhaps 60 or 70 percent of what we initially recommended will have been implemented in some manner. That's how government works.

Although I'm a step or two removed from it, I'm neither ecstatic nor overly disappointed with the process—it's what I thought would happen. 

Dan, as you leave the CRA, what will your focus be as a member of the Airport Commission?

Well, my immediate focus is to get confirmed by the City Council. Once that objective is achieved, it will take me a while to get back up to speed in the Airport issues. Obviously the Airport Master Plan, Ontario expansion and rates and charges are current issues. However, for me, the underlying task is to maintain an Airport system which meets our region's needs and to ensure that LAX continues to provide the international significance it does to our regional economy.