LA CRA Chairman Paul Hudson Elaborates on Agency's Agenda

Let's start with the good news. In Downtown Los Angeles, development, smart development, is everywhere, including transit-oriented projects and the construction of hundreds of market-rate housing units. Is this what the CRA is most proud of accomplishing?

I feel the best about what you're saying: smart growth. The whole idea of redevelopment is catalytic development, and I really feel that CRA was in on the ground floor before people thought that Downtown was in style and safe. The investments we made are now paying dividends with market-rate units. The same revitalization is going to happen in Hollywood, in North Hollywood. I think that's what CRA can be most proud of, really stimulating development.

When TPR interviewed CRA Chief Executive Officer Bud Ovrom in July 2004, we asked him about his ongoing plans to reorganize the CRA staff and management. Paul, please elaborate on what has happened in the last six months. How comfortable do you feel about the capacity of the management team to accomplish the agency's goals?

Well, the CRA reorganization was basically just implemented, and so I think that it is too early to judge its results. One of the things that came out of the Controller's recent audit report, in my opinion, is that we are probably understaffed. We have been downsizing for a long time, and now I question whether our staff levels can meet the operational needs to manage and protect city assets.

In last month's issue of The Planning Report, we printed an excerpt from one of the Controller's three recent audit reports, which suggested that there were slipshod tracking and recording practices in the CRA's real estate sales unit. Obviously, the board has reviewed that report. Can you give us an update on its official reaction?

Our official reaction is that we welcome the recommendations of the auditor to improve our operations, and that we are wholeheartedly behind taking corrective actions and making the improvements necessary to improve our underwriting, our monitoring, and collection of loans. I think those are the crucial areas where we need to focus. We do a good job, I think, of eliminating blight, stimulating development, working with developers, and negotiating what I think are appropriate agreements. The issues that were brought up by the auditor are appropriate in terms of the documentation we collect on loans, the underwriting process, the loan review and approval process, and I think most importantly the whole collection process and monitoring of delinquent loans in the aftermath.

Is there a connection between the reorganization of CRA and the Controller's audit? Will the restructuring strengthen areas in which you were weak?

The auditor's concern is that regionalization puts too much power in the hands of regional administrators. From a structural point of view, I understand what she's saying, but I think that it's premature to make that judgment. What she has asked us to do, and what we have agreed to do, is to create a loan review committee independent of the regional administrators and regional project managers that will review deals after they have been negotiated by the regions and prior to going to the board. The concern of the auditor is that regions would generate volume as opposed to concern for underwriting and working with sound developers. I think that it is premature for her to worry about it, but it is appropriate for us to institute systems that will ensure the integrity of the process.

Paul, TPR has covered the CRA for almost two decades. We have featured the explosive growth in Downtown L.A., we have shared opinions about the Harbor area, and we have covered North Hollywood. We haven't had much to share about South Los Angeles. Your family has deep civic and business roots there. What are the opportunities, and how will the CRA invest and focus in the future on that area of the city?

CRA has done a very poor job in South L.A., and I think also in East L.A. You don't see any development there of the magnitude happening in Downtown, Hollywood, or North Hollywood. Part of the reason is that tax increment dollars are just not generated there, and part of the reason is that the community has structured project areas that are narrow strips, making it difficult to get large enough projects that will attract big developments and economically stimulating developments. But the real issue is management and adequate financial and management resources.

I really think that it is going to be a focus of our board. We are looking at merging project areas and bringing new management into the South L.A. region, as well as identifying unrestricted funds that we can utilize there. It will require a combination of more resources, creative thinking, and some out-of-the-box strategies to redefine these project areas as more attractive to development. South L.A. and East L.A. are opportune in terms of transport corridors. There are major freeways that go through South L.A. We should be planning for the Exposition Line, which will be a major east-west thoroughfare, and now the Gold Line is going out to the Eastside. There are also a lot of schools being built in South L.A. So, the CRA really has to identify a game plan for these areas, given all the investments that are going to go into them.

The city, the county, and the state primarily work in their individual silos, and it is very difficult to bring them together to create neighborhoods. As a former MTA Board member, what are the obstacles facing your commission as you try to integrate these investments and leverage them to build neighborhoods?

The biggest obstacle is, as you said, this silo mentality, but I have seen dramatic improvement in inter-departmental relationships and collaboration. We have regular meetings with MTA and LAUSD. The CRA has done a number of joint planning projects with the MTA. We aren't there yet, but I think that everybody is conscious of the silo mentality and how it negatively impacts smart development. The biggest concern that I have is that LAUSD has such an ominous mandate and timeframe. They have to move so quickly that it is often difficult for them to incorporate all the other players into the picture. But we're talking. It is going to improve over time, and I definitely think that everybody has the right attitude about it.

The Governor's Secretary of Business, Transportation, and Housing, Sunne Wright McPeak, has made a number of speeches about what she calls "anti-dumb growth" [NOTE: see TPR's July 2004 issue] and is making some recommendations to the Governor about how the state can play a more substantive role. How can the state assist local governments, redevelopment agencies, and transit agencies to break through these silos?

Here's the message I hear across all departments: everybody is talking about smart growth. Not everybody has figured it out yet, but everybody is talking about it as the right thing to do. I think that is the first step toward progress. The state needs to figure out how to utilize its purse strings to encourage smart growth; that is the ultimate power. What I would say, without knowing the details, is that the state needs to figure out ways of leveraging its influence and control over dollars to encourage and give incentives to local governments to coordinate their efforts.

Los Angeles has entered a campaign season. What do you want to hear from the mayoral candidates about neighborhoods and redevelopment?

I'm a big proponent of smart growth, so I definitely want to have a mayor who thinks outside the governmental silos. I have been a member of the MTA board, it can be all about the City of L.A. versus the county, or L.A. versus the cities around it. So, I'm looking for a mayor who would talk about how the city can maximize benefits while still playing a positive role with other municipalities and try to look outside of people's limited ideas about what is best for the City of Los Angeles.

Last question, Paul. Your mother was once a member of the CRA Board. When you speak with her now, does she believe that anything has changed in the intervening 40 years re the Agency?

Well, when she was on the Board, there was no Oversight Ordinance! That's a major difference that she reminds me about all the time. That situation will have to be dealt with at some point. The city doesn't have an independent CRA, and the City Council hasn't taken on full responsibility, either. I'm not convinced that this is the best way to handle the situation.