CRA merger plan looks to have little bottom line effect; first year savings would be returned to newly formed units.

Los Angeles Mayor Richard Riordan's plan to cut overhead costs by merging the Community Redevelopment Agency with the Los Angeles Housing Department and divisions of the Community Development Department and the Department of Public Works would actually save the city virtually nothing in its first year, according to details of the plan revealed in the mayor's budget proposal released last week.

Although Deputy Mayor Mary Leslie said the merger would save $4 million in 1994-95, Riordan's Chief of Staff Bill McCarley acknowledged that money saved would be re-injected into the department, making for a budget that shows little change compared with keeping the agencies separate.

"There may not be any change in the bottom line," said McCarley. "We're saving money and plowing it back in. Business people should like this because there will be one office to go to ... instead of going to three or four or none. It will be business-friendly."

Stan Hirsh, chairman of the CRA Board of Commissioners (appointed by Riordan), pointed out that the plan would save money over time as employees are lost through attrition.

"The mayor promised there wouldn't be layoffs," Hirsh noted.

City Councilman Mark Ridley-Thomas, chairman of the council's Housing and Redevelopment Committee, said the creation of a "super agency" governing development, as proposed in the major's budget, is only one of the three possibilities for redevelopment reform being studied by the council. It has been examining ways to take oversight control of the CRA for more than a year.

Another proposal would involve replacing the CRA Board of Commissioners with the City Council.

Last week, the council ordered its Chief Legislative Analyst and City Administrative Officer to complete work on the proposals and return to the council.

"We said consolidation was under way, and we approve that, but not necessarily the mayor's way," said Ridley-Thomas. "The reorganization doesn't necessarily tie in with the budget. There a number of outstanding questions - the shuffling of the staff, for example."

Ridley-Thomas said all the related issues may not be resolved in time for city budget adoption by June 1.

The mayor's proposal incorporates the CRA's budget of $369 million for 1994-95 as the project program budget of his new Citywide Development Agency.

Ridley-Thomas said that so long as the CDA uses the same project area designations as the CRA, it would qualify for the same tax increment revenue and have the same eminent domain powers as the CRA.

Riordan's budget also includes an increase in the city "Housing Department" budget of $1.3 million over this year.

And the city budget proposal includes a transfer of $25 million in "CRA" funds to city offers. McCarley said the money may be transferred from the Central Business District and/or Bunker Hill project areas to pay debt service on the L.A. Convention Center expansion and Central Library renovations.

Hirsh said he favors Riordan's proposal because "coordination makes good sense."

"We (the CRA) don't coordinate with the them (the housing department)," said Hirsh. "It doesn't require three management teams to operate two housing departments."

The budget does not anticipate the city being allowed to raise the cap on Central Business District funding and thus allow future redevelopment projects downtown - an issue that is currently tied up in the courts.

"There's no question the Central Business District is gone in my mind," said Hirsh.

Leslie said business people also should like the mayor's budget proposal because it:

* Includes funds to hire 1,522 police officers;

* Doubles the allocation for street improvements;

* Eliminates a business tax surcharge (already scheduled to "sunset" at the end of 1994), thereby saving businesses $19 million;

* Calls for a streamlining of permit procedures;