City Center Plan Approved: Redevelopment Tools Critical to Downtown Revitalization.

Business/News Editors

LOS ANGELES--(BUSINESS WIRE)---May 15, 2002

The Los Angeles City Council gave final approval for a downtown redevelopment project that could generate up to $2.4 billion in revenues over 45 years. The revenues that finance the redevelopment project come from new or increased property taxes that occur as a result of redevelopment induced new development.

"We are pleased that the City Council established the geographic boundaries for an area destined for redevelopment and has given us the tools to establish new projects," said David Farrar, Chairman of the Board of Commissioners of the Community Redevelopment Agency (CRA) of Los Angeles. "The City Center plan will allow us to revitalize the parts of downtown which remain blighted and create a more vibrant downtown, the benefits of which will extend to all residents of this great City of Los Angeles and throughout the region," he added.

The City Center project area covers 879 acres in the eastern and southern quadrants of Downtown Los Angeles, generally bounded by Second Street (north), San Pedro Street (east), the Santa Monica Freeway (south) and the Harbor Freeway (west), excluding the Convention Center campus and the high-rise buildings in the downtown Financial District.

The goals of the City Center project are to create downtown housing, assist homeless service providers, preserve historic buildings, and generate jobs and economic development. The plan is expected to create approximately 12,900 new units of housing -- at least a quarter of which would be affordable to low and very low income households -- and up to 6.7 million square feet of new commercial and industrial development.

Property Tax Increment

The chief funding resource for the CRA is a pay-as-you-go financial tool called tax increment. The CRA has no taxing authority. When a redevelopment project is established, the city, county, school districts, and other taxing agencies continue to receive the same property tax revenue that flowed in the year before the onset of redevelopment. Taxes levied against the difference between the original tax base and expanding tax bases is called tax increment. New development, spurred by redevelopment activities generates new tax revenues. The CRA reinvests the new tax increments into the same geographic area of the redevelopment project area. Without redevelopment, it is unlikely that property taxes would increase because private development and investment does not occur in blighted areas since there is great financial risk.

Property values on blighted property can remain flat or even decline for decades without redevelopment. This has been the case in the parts of downtown Los Angeles that are now designated as the City Center Redevelopment Project Area (City Center), which includes parts of South Park, the fashion, jewelry, flower, and toy districts, and the Historic Core.

The Mayor is expected to sign the ordinance adopting the City Center Redevelopment Project Area plan prior to the end of the week.

Some specifics of the City Center Plan include:

-- Creation of 12,900 new housing units, a minimum of 25% affordable -- $1.159
billion

-- Rehabilitation of 1,500 single room occupancy units -- $75 million

-- Relocation, modernization and expansion of homeless and mental health
service programs and facilities and job training programs -- $56.2 million

-- Pocket parks and open space facilities -- $31 million

-- Public infrastructure and improvements -- $129.8 million

-- Primary school facilities including improvements to Ninth Street School --
$34.7 million

-- Rehabilitation and adaptive reuse of commercial storefronts, facades, and
historic buildings -- $54.5 million

-- Retention and expansion of existing industrial uses and development of new
industries -- $45 million

-- Public parking to provide safe and convenient facilities -- $40 million

The City Center Plan is supported by a wide array of residents, tenants, downtown businesses, homeless service providers, health and social services agencies, law enforcement, and local elected officials.