The End Of The CRA: A Look At Five Projects
CRA/LA has been roundly criticized for straying far from its core mission of providing affordable housing and improving blighted areas and instead using taxpayer money to subsidize commercial developments in more desirable submarkets. The city will now establish successor agencies to go through the process of selling off assets and using remaining funds they have to work on completing projects already in progress.
While it is impossible to predict what will come of each individual project, focusing on the different types of missteps and failures of the CRA/LA through five of the more notable projects can help in understanding how it met its unceremonious demise.
1. Grand Avenue Museum and Parking Facility
Location: Downtown Los Angeles
CRA/LA investment: $52 million
Billionaire developer Eli Broad wants to build an architecturally-spectacular museum in the Civic Center area of downtown in which to display his private art collection. The CRA/LA concluded that it was worth a taxpayer investment of $52 million in an area that is not blighted on a project that will provide neither affordable housing nor many jobs. This project will still likely get built, and seems to be a fitting symbol for the worst excesses of redevelopment agencies.
Conclusion: Don’t use taxpayer dollars to subsidize billionaires’ vanity projects.
2. Marlton Square Shopping Plaza
Location: South Los Angeles
CRA/LA investment: $2 million
Despite his highly successful track record in urban real estate ventures, Magic Johnson was passed over as the prospective developer of the Marlton Square Shopping Plaza for political reasons. The CRA/LA’s (really Mark Ridley-Thomas’) choice for developer, Christopher Hammond, had a much less established and stable track record and has abjectly failed to deliver, leaving the site as an unseemly and dangerous wasteland. This will not end up being the CRA/LA’s biggest financial loss, but it is a tremendous failing of a community badly in need of an economic boost from a successful real estate development.
Conclusion: Crony capitalism is bad, and it’s not even capitalism.
3. Vine Street Tower
CRA/LA investment: $4.6 million
This is a case of more taxpayer money going to build Class A office space in a desirable part of Hollywood. The Vine Street Tower project page in the CRA/LA’s November 2010 activity report says it is “designed to attract top quality companies in the entertainment industry.” One would think these top quality companies in such a lucrative field would be profitable enough to where they could afford to, and would want to, pay rents high enough to office in a Class A space in Hollywood, boosting their business image, without needing community redevelopment funds to help do so.
Conclusion: Hollywood doesn’t need tax subsidies to attract the entertainment industry.
4. Westlake Theatre
Location: Central Los Angeles
CRA/LA investment: $10 million
There are not a lot of friends to be won in the Los Angeles political class by criticizing the restoration of historic theaters, but a $10 million investment that gives us 49 “undetermined affordable units” of housing and a “mixed-use entertainment venue” (whatever that is), is a stretch for community redevelopment funds, particularly at tight times. The CRA/LA owns the historic but decaying theater, and has been looking for a partner to double down on it and do this big redevelopment. It would be hard to argue that Los Angeles is suffering from a lack of historic performing arts spaces or performing arts spaces in general, and many of us enjoy living in a creative city and cherish this fact. However, if the Westlake Theatre has historic and/or performing arts value that makes it worth blowing out as a major redevelopment, it will happen. The CRA/LA should, and likely will have to, sell this asset and set it free.
Conclusion: This is a luxury item which does not provide enough of an economic impact or affordable housing to justify it as a community redevelopment expense. There is a separate budget for historic sites and museums.
5. NoHo Senior Artists Colony
Location: North Hollywood
CRA/LA investment: $6.6 million
The NoHo Senior Artists Colony is an active aging complex consisting of 98 market-rate and only 27 affordable-housing units. Market-rate units, by definition, should not require a subsidy, as the market price of a unit would account for all costs and a built-in profit margin. The project also includes a theater and art facilities, and is located in a, by any interpretation, non-blighted part of Los Angeles. I love senior citizens, but we shouldn’t be financing their arts and crafts classes, and especially not out of community redevelopment funds.
Conclusion: Taxpayer funded art programs for seniors who can afford to pay for market-rate units are not part of community redevelopment.
The CRA/LA is an easy target, but its downfall can provide insights into why certain government agencies that may begin with a noble and popular purpose can lose their way to bloat, waste and compromise.
One project I just had to laugh at was a $200,000 CRA/LA grant to place exercise equipment in six parks downtown. Per the language in the November 2010 activity report, this was to “reuse existing park space for recreational and health purposes.” I was under the assumption that park space was already being used for recreational purposes but sometimes clarification is helpful, for both sides. If the redevelopment agencies had done a better job of reusing community redevelopment funds for community redevelopment purposes, they may not have found themselves in this situation in the first place.
Reach staff columnist Matt Pressberg here.