City Council reins in redevelopment unit: panel asserts control over CRA's decisions, spending.

City Council reins in redevelopment unit

The Los Angeles City Council ended months of political wrangling last week by voting itself new oversight powers over the embattled Community Redevelopment Agency.

Under the new policy, approved unanimously by the City Council Feb. 26, the City Controller will approve all CRA expenditures and the City Attorney will be the agency's general legal counsel. More importantly for Los Angeles' powerful real estate interests, the City Council will now have the authority to reject most agency decisions and remove any of the CRA's seven commissioners by a two-thirds vote.

While the political fallout from last week's action is still being debated inside City Hall, the council's new power raises questions about the CRA's ability to juggle commercial development and construction of affordable housing in uncertain economic times.

The new oversight law still requires the approval of Mayor Tom Bradley. The mayor's office backed a less restrictive reform package after the contreversial $1.6-million buyout agreement of outgoing CRA administrator John Tuite prompted calls for reform or even a council takeover of the agency.

Said Councilwoman Gloria Molina, who pushed for the new controls, "The CRA doesn't seem to be careful of taxpayers' money. They need accountability."

With the skyline Bradley wanted for Los Angeles basically complete, the CRA must now, in some cases, confront factors beyond its powerful reach. The credit crunch and recession that has whacked Southern California's real estate market will have a tangible effect on urban renewal, as will the outcome of three City Council races and Los Angeles County's belt-tightening.

That in turn will affect the CRA's ability to close the affordable-housing gap.

This year the CRA is helping to develop and rehabilitate, mainly through non-profit developers, 1,838 affordable housing units in densely populated areas like Chinatown, North Hollywood and South Park. Though a top political priority, affordable housing production has actually been dropping slightly. Two years ago the agency helped build or refurbish 1,913 housing units.

The reason is money, though agency officials say as many as 2,500 units could be completed by the end of 1992.

While the portion of funds the agency earmarks for affordable housing has risen -- from 25 percent last year of its budget to 32 percent this year -- its overall budget has dropped. In 1988 and 1989 the CRA had a budget of more than $500 million. This year its spending plan is estimated at $349 million.

Part of the reason for that is the real estate slump. As CRA Board Chairman Jim Wood has repeatedly said, agency-subsidized m commercial projects like office towers and shopping centers generate public funds for affordable housing, day-care centers and homeless shelters.

CRA board member Carlyle Hall down-played any money crunch, saying that successful redevelopment projects in the downtown Los Angeles and Bunker Hill areas are "insulating the CRA from the business cycle."

A look at some of the CRA redevelopment projects:

* The Central Business District in downtown Los Angeles' financial core is the agency's best-funded and most prosperous redevelopment area. The CRA, using its power to assemble land and package low-interest financing, helped developers erect gleaming, marble-and-glass skyscrapers like the First Interstate World Center and the Southern California Gas Center. Less successful have been efforts to erect a new Convention Center Hotel and breathe economic life into blighted Spring Street, though completion of the Ronald Reagan State Office Building may give the area a lift.

Future CRA plans to make downtown Los Angeles a "24-hour urban village" hinge on negotiations with the county to raise the agency's spending cap.

* In Hollywood, the agency's 30-year plan to pump $922 million into a 1,100-acre area remains mired in the appeals court system. The CRA is hoping for a favorable decision sometime this year so it can use its primary source of funds -- tax increments -- to revitalize the movie capital.

For the time being, agency officials say that one key mixed-use project, the unbuilt Hollywood Promenade, may convince others to build and invest there. The City Council will decide whether the CRA's plan to subsidize the Promenade with $48 million in public funds is worth it.

* The agency also has an ambitious plan to revitalize blighted parts of Watts and South Central Los Angeles. Eleven months ago the agency board sent a plan to expand the current Watts renewal plan into a 15-year, $204 million project. However, when Watts community leaders got word of the plan, fears of eminent domain and gentrification caused an uproar.

Developers, who already must fund affordable housing projects and pay into the CRA art fund in order to build new office structures, are nervous about the "councilization" of the agency.

"Agency dealings, which take a tremendous amount of time, will now take even more," said land use attorney Doug Ring. "But there aren't long lines of developers out there proposing new projects. The main reason they aren't there is for economic reasons."

Councilman Mike Woo, who attempted to water down the reform package that he eventually supported, agreed. "CRA initiative will be slowed down to some extent. It's the price you pay for accountability."