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The End Of The CRA: A Look At Five Projects

Matt Pressberg |
January 31, 2012 | 9:22 p.m. PST

Staff Columnist

Downtown Los Angeles (photo courtesy of Creative Commons).
Downtown Los Angeles (photo courtesy of Creative Commons).
Tomorrow will mark the official, and in many parts welcomed, end of California Redevelopment Agency Los Angeles (CRA/LA). The California Supreme Court ruled last December in favor of Assembly Bill 1x 26, signed by Gov. Jerry Brown in June, to abolish the state redevelopment agencies and redirect their funding to fill other holes in the state operating budget.

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.

Data from the November 2010 CRA/LA Activity Report available on its website, with updated CRA/LA investment figures from its January 2011 release:

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

Location: Hollywood
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.

 

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Reach staff columnist Matt Pressberg here.



 

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Comments

Wanderer (not verified) on February 3, 2012 10:43 AM

The underlying theory that projects in good areas will just happen anyway is simply false. Historic office buildings have languished for years in the heart of Downtown Los Angeles. The private market certainly won't build any affordable housing--why should they build cheap housing on sites where they could build expensive housing (which are the only sites bikes might lend on? Will Mr. Pressberg now stump for a 20% inclusionary requirement--20% affordable units required in all private construction--to make up the 20% redevelopment setaside for low income housing. If the criterion was that every project a company or agency did has to be perfect then we could shut down all of them tommorrow. The loss of redevelopment is going to be tragic for every city that actually wants to develop affordable housing--including Los Angeles. If there had been less bloody-mindedness on both sides, redevelopment could have been mended not ended.

Your rating: None Average: 5 (1 vote)
Rosa Koire (not verified) on February 3, 2012 9:14 AM

Thanks for this short compendium of projects that pound our sand dollars down the rat hole of redevelopment. This crony-laden slush fund for developers and their pals is well over. Those of us who have fought redevelopment for years feel vindicated now that these stories are coming out. Here in Santa Rosa, CA we sued to stop a huge 1,300 acre project that was clearly a way to scrape property tax dollars off the top for 30-45 years to enrich a few fat cats. We lost but stopped the project. As I travel the US speaking about UN Agenda 21/Sustainable Development and linking it to funding mechanisms like redevelopment, I am reminded that redevelopment (TIF) and Infrastructure Financing Districts live on both here and across the US. Those of us who are fighting the inventory and control of all of our resources--both human and natural--through administrative programs recognize that our own taxes are funding the programs used to restrict and manage us. For more info please see our website Democrats Against UN Agenda 21 dot com

Your rating: None Average: 3 (2 votes)
Scott Zwartz (not verified) on February 2, 2012 3:01 PM

The Vine Street Tower aka The Cesspool on Vine aka VineGate is most notorious for the $1.4 Million appraisal fraud. As an entertainment building it is a complete sham. That is why in seen years it could not find a single entertainment tenant. Creative companies in entertainment are current going for low horizontal buildings where people from different departments are forced to cross-paths and converse with each other. Multi-story building are like Darth Vader to creativity. People are so stratified that you Father could be on the top floor and you'd never know it.

Scuttlebutt has it that the entire Vine project was a fraud to get loot out of CRA for Steve Ullman, who was on the persona non grata list. Now that's a feat. Being so untrustworthy that even the CRA won't deal with you -- that's the rumor on the street.

Don't forget the $454 Billion loss on the CRA Hollywood-Highalnd or the financial disaster at the w Hotel or the nightmare at the CRA Hollywood-Western Project.

Your rating: None Average: 5 (1 vote)
Alex (not verified) on February 1, 2012 10:23 PM

Your snark is cute, and sure, the CRAs are fun to pick on, but I've got to take issue with your statement that the NoHo Senior Artists Colony "is located in a, by any interpretation, non-blighted part of Los Angeles."

Google Maps may show a Walgreens and Ralph's down the street, but I challenge you to drive that portion of Magnolia Blvd. and tell me you don't see any blight. I've lived on Riverton for almost three years and would love the stable residents and ground-level retail this development could bring to the neighborhood.

They're my tax dollars too, and I'm all for them going toward something that will improve this area.

Your rating: None
pressber on February 2, 2012 12:51 AM

Your comment is fair; most of us favor our tax dollars being used on projects that would enhance our immediate community and exercise our democratic rights to advocate for them.

I just don't think 27 affordable units and a community theater is a good deal at all for the taxpayers at a $6.6 million price tag, especially in these times. Also, not to imply that stretch of Magnolia is Rodeo Drive, but there are other blighted areas that seem to require more urgent attention from a limited pool of resources.

I think we both hope for the same thing in the end; an enterprising developer improving that real estate and bringing in the stable residents and ground level retail without asking for a handout.

Your rating: None Average: 5 (1 vote)

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