LA/CRA’s New Chairman: A Primer on the Issues Befuddling the Agency

Given the Agency's limited resources, the proposed consolidation proposals and the challenges facing Los Angeles, what should be the role of the LA/CRA in 1995? 

To stimulate economic activities in the desired geographic areas and to revitalize neighborhoods. 

Does the Agency have the resources and the talent to do the job? 

Let me segregate my answer. On the resources side - no. The fact of the matter is, while we are actively engaged in expanding geographic redevelopment areas, our tax base is busily eroding itself. The Agency's primary funding agent - tax increment funds - has changed profoundly in the past four or five years, and has greatly reduced what I would characterize as non-committed, programmatic funds for redevelopment. This trend is compounded because the past couple of years millions have been transferred to subsidize the City of Los Angeles' General Fund. Next the Bernardi litigation has delayed implementation of the joint City-County-Schools agreement on the Central Business District "Cap", thus depriving the agency of over $25 million in this year alone. FInally, CRA funds set-aside for social services and housing are completely out of proportion to the Agency's economic development and job creation activity. So we are not enhancing the community's economic base or the tax base for the redevelopment areas themselves. As a result, there is not enough money to go around and yet expectations continue to mount at the City Council. This year, the Council is going to bear that we have to change our priorities, look for new funding and augment our tax base. And frankly, I think people realize circumstances have changed. The CRA’s job will be to make the analytical presentation and inspire confidence in the numbers we present.

On the talent side, I think the jury is still out. There are still many talented people at the Agency. There are many people who have also left the Agency. I think the battle between the City Council and the executive branch over control of the Agency has further served to impair the morale and the overall sense of clarity of mission for the people working at the Agency. The agency has been thrashed by the Council, the media, the Chief Legislative Analyst, the Controller and several local groups for years and it's taken its toll on morale. It's really impossible to make an assessment of the efficacy of the current staff. 

What kind of person are you looking for as the new Administrator of LA/CRA? And, given the controversies surrounding the Agency over the last couple of years, who is likely to take the job? 

Answering the second part first. I do hope, given the pending reorganization plan, which has been coupled with the takeover issue, this matter will be resolved before the Agency hires a new administrator. We are talking about a few months. Thus, by the time someone moves into the position, the City will have resolved the issues surrounding its relationship with the Agency. 

Ideally, we are looking for God, though I imagine he or she might turn it down if it was offered. There is a steering committee conducting the screening which is composed of myself, Deputy Mayor Rae James (on behalf of the Mayor), Councilman Mark Ridley-Thomas and Councilman Mike Hernandez. The committee has different perspectives - two community-oriented members, Rae James has more of a business perspective as the Mayor's representative, and myself, I'm sort of in the middle. 

My guess is we want someone who not only has a solid understanding of the redevelopment process, but who also has the ability to understand community and constituent politics. It's clear we need an effective communicator who can operate in both worlds.

Currently, LA/CRA spends about 60 percent of its program funds on affordable housing, while the state only mandates 20 percent. Is there likely to be a fundamental revaluation of affordable housing funding?

That figure was determined by consultants hired by the City Council, not me. It is interesting how the City Council's own, hand-picked consultants recommended going back to the 20 percent set-aside for affordable housing. I can tell you that 60 percent is just too high if you care about economic conditions and the City's tax base. I'm not hostile toward housing, but unless we get our tax revenue base up the Agency eventually won't be able to fund any housing or anything else for that matter. Also, if you look at what David Friedman and Joel Kotkin are saying about the restructuring of the economy, these funds are in great demand because we don't have smokestack industries with their own resources. It's the medium- and small sized entrepreneur we have to attract, and I think there is a real art to making it work. It will certainly require a renewed focus on economic, job creating activity. 

As someone knowledgeable on the potential for and limitations of real estate development as the backbone for economic development, is redevelopment too weak a tool? 

It can certainly be effective in certain areas, but in and of itself, it can't change the macroeconomic picture of the City and the global influences on the region. If you have $400 million per year, you can make a big dent, and you can certainly change opportunities in a given geographic area. I think we can make a material difference in the economic fabric of the city if we use the tools correctly and achieve a proper balance between jobs and housing. But, presently, the CRA cannot do it alone. Only the Agency's current resources can be augmented. The Community Development Bank, for example, could become an important source of new capital for neglected areas in the city. Given what we know about demographics and changing socio-economic conditions, we have an excellent opportunity to create future opportunities if we strengthen our resources and deploy them correctly. Our activities could be a great vehicle for recruiting people we wouldn't necessarily contact; to that extent, we can make a profound difference in the future of the City. The City Council's political tendency to disperse resources, however, will need to be discouraged somewhat if we are to achieve significant change. 

What about the role of the Agency as it moves into new redevelopment project areas? 

With respect to the new earthquake recovery zones, I'm worried a falling tax base may leave those areas with few resources to do the job. Then, of course, we are being sued by a group of individuals who don't want to help people who have been hurt by a disaster. Given their negative attitude, I sometimes wonder why we'd want to spend any resources at all. Still, I'm not convinced these negative squeaky wheels represent the majority of people in those areas. In any event, the Council has voted us into those areas and we are proceeding to implement the limited objectives in each case. 

We've talked about restructuring loans and other efforts, but this still presumes funding for these activities. In the next couple of months we will find out if there is a pool of resources available. My guess is we will have a substantial shortfall in resources and we are going to have to refocus our programs on new areas. Whatever the case, we will do our best to move quickly. 

Under the Riordan Administration, the Agency has had a relatively good implementation record, but has had a small role in implementing any of the proposed economic development functions. Can you comment on the Agency's role as implementing arm of these revised economic development strategies? 

Personally, I support the merger of the CRA and the Community Development Department (CDD). I don't want to sound specious about this, but I have never clearly understood the global mission of the CDD other than to use Block Grant funds for ad hoc projects. It seems to me in this era of shrinking resources, we shouldn't dissipate our resources. As a consequence, I believe the Mayor's proposal is an appropriate recommendation. But again, we have to agree on our mission for particular neighborhoods. 

The Agency must adopt to the new environment. There is much work to be done defining various functions, but ultimately there is no reason why the redevelopment process has to be hamstrung completely by the Agency's current shortfall of tax increment funding. 

All this activity by the Agency is in furtherance of a prosperous and livable city. What are the strengths and weaknesses at play, in regard to the City achieving its goals? 

First and foremost, we are a vital and diverse community, despite all of the negatives associated with crime, physical catastrophes and perceived rampant immigration. Los Angeles appeals to people from all over the world. People come here not only to live, but to visit and invest. I think this is a tremendous asset. We have a massive labor base which wants to work and we need opportunities for people to move up the ladder. We have a tremendous vitality which does not exist in some of the older East Coast cities. 

Channeling this entrepreneurial energy is a question of maturity, and I view maturity to be at the heart of our political problem. Out of touch leaders view Los Angeles through the curtain of 1960's politics. Race relations must become more harmonious and fighting over crumbs must end. We need to focus on maximizing our opportunities for communities with the available resources. I don't think that is too difficult. After all, we are a seat of government, powerful industries are located here. If we use our infrastructure resources prudently (transportation, ports, airports, Alameda Corridor, etc.) to improve mobility and commercial capacity, we will stabilize our economic base. 

If we take advantage of entrepreneurial activity in our region, Europe, Asia and Mexico (once they overcome their own difficulties), Los Angeles is destined to be an increasingly important hub in the global economy. The hardest part will always be figuring out what to do with the lower tier, the unskilled sector of our labor force. I don't know what the answer is, but I do know, if we don't do anything, we will be staring social inequity and turmoil dead in the face.