It Takes Two to Make a Deal: Los Angeles County’s Perspective

The County is a major downtown property owner. We are also a major provider of regional public services and the largest employer in the county. As such, we would like to be a major player in the City's downtown strategic planning efforts. We, therefore, seek the active cooperation of the Los Angeles Community Redevelopment Agency, the Planning Department, and the other City departments as a basic condition of our agreement to an increase in the Central Business District increment cap.

The County owns or has participating interest in over 60 acres of land within the Bunker Hill and CBD development project areas. The County's primary interest is to develop its underdeveloped parcels in a manner which will improve the public facilities and open space within the civic center area and, through the construction of commercial and retail space on County leaseholds by private interests, provide a long-term stream of income to pay for essential public services.

For example, our civic center objectives include: completion of the Disney Concert

Hall and related facilities on Bunker Hill; improvements to the existing Music Center to make it architecturally compatible with Disney Hall, and to provide more gift shops, restaurants, and outdoor facilities; revitalization of the entire Civic Center Mall to make it a cleaner, safer, more attractive, and more accessible place to people working and visiting downtown; eventual relocation out of the civic center of the Sheriff’s Administration and 2,000 prisoners from the Hall of Justice, which is seismically unsafe and deficient in many respects; and construction of a 400-room, four-star luxury hotel adjacent to Disney Hall.

It should be emphasized that our downtown property development objectives and the entitlements which we will be seeking, including density, are in conformance with the land use and development controls of the Agency’s applicable Redevelopment Plans and the City's Central City Community Plan.

As a separate governmental jurisdiction, the County has never stipulated to the regulatory controls of various City departments or the Agency with respect to the design, planning, and disposition of our property. However, we have voluntarily agreed to comply, including taking appropriate measures to mitigate all environmental and traffic concerns attributable to our activities.

The major focus of the County's efforts at this time involves the development of its First Street properties. The plan calls for the development of 1,450,000 square feet of high-rise office, retail, and day care facilities on the largest parcel across from the Courthouse and a 315,000 square feet luxury hotel and retail facility on the parcel across from the Music Center. The Disney Concert Hall will accompany this commercial development.

The County has been engaged in the planning process with the LACRA since 1985. In April 1986, in exchange for the County's agreeing not to contest LACRA's Hollywood Redevelopment Project, a supplemental memorandum of understanding (SMOU) was signed wherein the LACRA agreed to provide the County with certain entitlements and to undertake certain actions which would culminate in the construction of this 1.7 million square feet of commercial uses on the First Street properties.

The County has fulfilled its part of the bargain by not contesting the Hollywood Redevelopment Project. On the other hand, the LACRA has engaged in a series of delaying tactics. While acknowledging their responsibility under the SMOU and their intent to comply in full with its provisions, their actions, to date, have been anything but responsive.

It has become abundantly clear to the County that our downtown development opportunities are being held hostage by the Agency until the County relinquishes its position with respect to the CBD increment cap. To quote my boss, Richard B. Dixon, "if this were private industry instead of public services, we would call it extortion".

As I have indicated, the County, as a matter of law, is not subject to the City's or the Agency's regulatory, zoning, and other municipal powers. However, we have voluntarily agreed to abide by the City's requirements so long as we could be assured that the entitlements which we require were not unreasonably or indefinitely withheld.

With continued foot-dragging on the part of the Agency, the County is reaching a real point of frustration. We are hopeful that our discussions with the City may be elevated to a level where our disagreements may be amicably resolved. If it is not possible for our development to proceed on a cooperative basis, we will need to proceed in any event, because of the grave fiscal problems facing the County and the potential revenue to be realized from our property development.

Finally, I would like to touch upon some of the benefits I believe would accrue to the City from adopting a cooperative approach with the County with respect to sharing the increment cap and our downtown development. First, the CBD project, which will otherwise be out of new funds in 1992, would be able to continue. Approximately $2.44 billion in additional tax increment would be available to the Agency to pursue its work program.

This equates to raising the current cap by a factor of three, and although it is not everything the Agency has demanded, this sum can hardly be taken lightly. Second, the City stands to gain considerably from the County's civic center development.

We estimate that between now and 2010-2015 (the end of the present CBD and Bunker Hill projects, respectively): over $500 million in new revenues to the City would be generated in the form of additional sales taxes, property taxes, business license fees, space rental fees, and hotel taxes; forty thousand temporary jobs would be created due to new construction activity; forty-three thousand permanent jobs would be created in new retail and office space upon completion; and finally, the City would have, in the County, a fiscally stronger partner, better able to address common problems which affect the quality of life in our community.

It is the County's belief that significant long-term benefits will accrue to both the City and the County from cooperation on the cap issue and in furtherance of the County's objectives within appropriate City planning guidelines.