CRA to seek state legislation to permit it to provide seed money to small businesses.

The Los Angeles Community Redevelopment Agency next year plans to support state legislation that would allow the CRA to use its tax revenue to provide seed money to small businesses.

Currently, CRAs are limited under state law to spending money on redevelopment projects, such as new construction and renovation and expansion of existing buildings, in "blighted" or disaster-ravaged areas.

Leslie Lambert, housing manager for policy and development at the L.A. CRA, said the idea for the legislation came from the CRA's riot recovery staff, which handles new and expanded CRA project areas resulting from the 1992 Los Angeles riots.

Under the proposal, the CRA could provide grants of up to $30,000 to small businesses and community-based economic development entities within project areas and disaster-recovery areas, to help get businesses and programs off the ground. The entities receiving the money would have to secure three times the amount granted by the CRA from another source.

"It's the opening of the door for operational funds (coming from CRAs)," explained Lambert.

Action seen in January

A motion to support such legislation was approved by the CRA Board of Commissioners last month and forwarded to the City Council's Committee on Intergovernmental Relations, which will take up the matter later this month or in January.

The CRA had favored actually "sponsoring" such a bill, but the city's Chief Legislative Analyst's office insisted that the motion be amended to say that the city "supports" the legislation, said city staff.

The proposal is part of a package of legislative policy regarding redevelopment that was approved by the CRA board on Nov. 17. That package likely will be included in a larger policy statement and will include a variety of recommendations from various city departments. The statement is expected to be approved before the end of January by the full City Council.

Lambert said the proposal could be included as an amendment to more general redevelopment reform legislation, expected to be introduced in Sacramento in 1995.

CRA foes continue to oppose any legislation expanding the authority of redevelopment agencies.

Century City Attorney Barbara Blinderman, who represents former L.A. City Councilman Ernani Bernardi in legal action to stop the city from lifting a cap on Central Business District taxes, wrote a paper recently condemning the CRA's legislative suggestions and calling for an audit of CRA spending.

CRA slammed

"What the CRA board did was to approve the use of city taxpayers' money to lobby bills to increase CRA power and its access to more taxpayer money," wrote Blinderman.

Other items in the CRA's legislative agenda package include:

* Supporting amendments to state disaster law "which support the CRA's ability to plan and implement recovery efforts in communities which are affected by disasters."

Lambert said the existing disaster law is "working OK" for the L.A. CRA, but it is expected to be amended next year in an effort to make it more clear and specific. The CRA simply wants to be in a position to lobby for changes that enhance its powers in recovery areas, rather than make its job more difficult.

"The disaster law now is so broad you could drive a truck through it," Lambert said.

* Supporting a bill that would "encourage" state pension funds to invest up to 2 percent of their investment funds in economic development activities.

Similar legislation has been attempted in the past but has not been passed.

L.A. wins another round in cap lawsuit

A second court ruling went in favor of the City of Los Angeles last week upholding the legality of an intergovernmental agreement on raising the cap on funding for the Central Business District redevelopment project area.

Bruce Tepper, an attorney with Kane, Ballmer & Berkman in Los Angeles representing the city's Community Redevelopment Agency, said the city in the next two to three weeks will file a petition in Superior Court asking that the $750 million cap -- imposed in 1977 in a court ruling -- be lifted, under the terms of the intergovernmental agreement.

The agreement to raise the cap -- approved in December 1993 by the City Council, the CRA Board of Commissioners, the L.A. County Board of Supervisors, the L.A. Unified School District and the Community College District -- was challenged in four lawsuits brought by former L.A. City Councilman Ernani Bernardi.

It was an earlier suit by Bernardi that resulted in the setting of the original cap.

Bernardi's recent lawsuits were based on the contention that the various government boards involved in the agreement violated the state's open meetings law in approving it.

To date, two of those four cases have been dismissed. Bernardi's attorney, Barbara Blinderman, said both those rulings will be appealed.

More hearings ahead

A hearing has been scheduled for Dec. 14 on the third lawsuit.

The fourth case, filed against the Board of Supervisors, have yet to be heard.

If any of Bernardi's cases is successful, and the agreement is struck down, the government entities involved will not be allowed under current state law to simply re-approve it with adequate public notice and hearings.

A law went into effect Jan. 1, 1994, setting formulas for allowing CRA tax revenue to "pass through" to other governmental agencies. The L.A. agreement does not follow that formula, and an agreement using the formula would not meet with the approval of the county.

If the cap is not lifted, all tax revenue collected by the CRA in the CBD after June, 1995 will have to go toward paying off existing debt, and nothing will be available for other redevelopment projects.