In Criminal Scheme to Skirt California Law, L.A. 'Community Redevelopment Agency' Only Reminds Us Why It Should Be Toppled
Let's pretend, for a moment, that the L.A. Community Redevelopment Agency didn't just defy the governor and violate the transparency codes of the Brown Act without batting an eye in a surprise meeting last Friday. Let's instead rewind to last Monday, when Governor Jerry Brown first proposed that California wipe out every one of its redevelopment agencies -- including the massive Los Angeles CRA.
Brown's argument? All the billions of dollars that quasi-autonomous CRAs spend and make off developers and property taxes should be redirected toward schools, police, firefighters, libraries, etc.
The Los Angeles CRA's retort? Board chairman Kenneth Fearn gave it to the Silicon Valley Mercury News on Friday:
Fearn said the Los Angeles agency needed to keep improving neighborhoods and boosting employment but feared the state would redirect the tax money to other parts of California.
"There's no means of assuring that the money gets returned to the city of Los Angeles" under Brown's proposal, Fearn said.
OK, Fearn. You asked for it. Let's take a little looksie at all the ways the CRA has "improved neighborhoods" and "boosted employment" during its ever-expanding reign over "blighted" L.A. sprawl.
(In case you're still lost, and we don't blame you: The CRA is doing its best to transfer almost $1 billion in projects to the City of Los Angeles, where the money and the agency will then be transformed into a so-called "Successor Entity" -- basically the CRA under a different name. It would be allowed to keep the same budget, same staff, same workers-union allegiances, same pensions -- same everything.)
Back to business: What, exactly, has the CRA -- and the city's own housing and planning departments, indications of how City Hall would run a new "Successor Entity" -- done for us lately?
[Attorney Richard] MacNaughton is accusing top pols like [L.A. City Councilman Eric] Garcetti, and CRA officials, of a cover-up, of lying to the other 14 council members, and of underpricing the value of this super-choice Vine Street property by more than $1 million in preparation for its sale to City Hall pal Hal Katersky.
City Hall's incessant cravings for profitable land deals make the CRA a great friend to keep near. On the L.A. Department of Housing's part, the Weekly discovered in a March 2010 investigation that one of its grandest projects, "156 condos, called Puerta del Sol, and 378 other apartments squeezed between Avenue 26 and the thundering I-5," was built next to roadways despite scientific evidence from USC that the apartments would cause lung problems in any children who lived there. Patrick Range McDonald reports:
Meanwhile, on the other side of downtown, the Los Angeles Housing Department provided down payments to buyers to move into Puerta del Sol, a stylish condo complex in the Avenue 26 community where teenager Andrew Garcia breathes in the factorylike emissions and particulates created daily by 285,000 vehicles.
Since then, with the city's enthusiastic backing, including that of Councilman Ed Reyes, who represents Lincoln Heights, the village's politically well-connected developer, Percy Vaz, has marketed the project to families tired of commuting -- in effect, targeting parents to live in an area scientists now know is unusually hazardous to their children's health.
Coincidentally, a federal grant of $2.5 million, granted to the CRA in October for a freeway-side project that could put more kids at risk, will now be part of the $1 billion transfer to City Hall.
The CRA is currently allowed to have its way with any area of land designated as "blighted" by its own board -- along with the L.A. mayor and the City Council -- and currently presides over thousands upon thousands of L.A. acres. [For maps and layouts of all affected neighborhoods, click here.]
Inconveniently, though, the decisions do have to follow California Redevelopment Law. That's why the L.A. CRA took to lobbying San Fernando Valley Assemblyman Felipe Fuentes, or "The Worst Legislator in California," to convince the rest of the State Legislature to lift those annoying regs this year:
The CRA has the power to declare eminent domain over blighted areas. According to the original wording of AB 2531 that Fuentes put his name on, "blight" would be expanded to a radical new definition: those unhealthy neighborhoods with "high incidences of obesity, diabetes and other diseases which are affected by poor access to fresh food" or places where there are "high incidences of asthma, lung cancer and other respiratory diseases which are affected by air pollution or the presence of contaminated properties," and, lastly, areas "that suffer from a lack of parks and open space." ...
"Currently, you have to prove an area is blighted, and that takes about two years to do so," [engineer and former Hollywood Studio District Neighborhood Council member Bob] Blue says. Fuentes' law, dreamed up by the insiders at Los Angeles' redevelopment wing, "would have circumvented the process and eased the definition of 'blighted.' "
It also would have allowed developers first dibs on land condemned by the CRA and the city -- while providing those developers with favorable loan terms, Blue says.
Says [legal researcher and CityWatchLA blogger Ziggy] Kruse: "The CRA tries to get its hands on whatever land it wants. There are a couple of obese city councilmen whose neighborhoods could be condemned and land taken if this bill had become law."
In another Weekly story from 2008, titled "Los Angeles City Hall as Slumlord," reporter Tibby Rothman watched the City Council and the CRA push forward a development in which "tenants had no running water or drinking water in the midst of summer heat, and, without running water, toilets were backing up with raw sewage." From the story:
Brushing off the allegations of a bedraggled group of protesting tenants at an explosive Community Redevelopment Agency hearing last summer, two Los Angeles City Council members lobbied extensively -- and unusually -- to assure that the alleged slumlord of the Alexandria Hotel, Ruben Islas, received $8 million in taxpayer monies for another, similar downtown renovation project.
L.A. Weekly has learned that City Councilman Tony Cardenas and his colleague Jan Perry -- with an assist from Assemblyman Fabian Núñez -- sought Mayor Antonio Villaraigosa's personal involvement last August to make an unguaranteed loan of public funds to Islas, a rich political insider.
The push came after Islas, his wife, his business partner, his employees and their family members gave Cardenas $10,100 in contributions in 2006 and 2007. In fact, city records show, just 27 days before the raucous CRA hearing in August, Islas and his wife gave Cardenas $2,000. And 10 days after Islas got final City Council approval for the subsidy, Cardenas received another $2,000 in total from Islas, his wife, his business partner Jules Arthur and Arthur's wife. ...
The CRA board backed Cardenas, approving an $8 million subsidy for the so-called Rosslyn Lofts, an Islas-controlled renovation project downtown, nowhere near Cardenas' own council district miles away in the San Fernando Valley.
Those, dear readers, are the very L.A. politicans who now wish to tuck the CRA -- and all your blighted neighborhoods -- under the cozy mayoral wing.
And you thought your landlord was bad. (More shady CRA deals in the archives: Peruse at your own leisure. And for an in-depth look at the agency's pre-1999 failures, see the Weekly's own "CRA, Change Your Way.")
As for all this "boosted employment" the CRA always brags about -- there's really no way to know which non-favorited firms might have moved in and developed without CRA subsidies. Current regulars are addicted; it's hard to say what this city would even look like without them.
One more CRA scandal for the books, titled "Los Angeles Corporate Welfare: Ritz-Carlton and AEG":
[Denver-based billionaire Philip] Anschutz will not pay off that $70 million loan provided by L.A. taxpayers until 2025, yet public documents filed with the Los Angeles County Recorder's office reveal that an Anschutz company has already sold off three significant parcels within the project area.
AEG took the revenue from the resale of the three parcels, a transaction allowed by the redevelopment agency, and then the city shifted the planned projects on that land over to new owners. Yet at least one of those key parcels contained lots seized by the Community Redevelopment Agency from a private owner, using the eminent domain statute, purportedly to fight "blight."
The eminent domain takings in the area of what is now Staples and L.A. Live in the 1990s left many private landowners deeply embittered over being forced off their property at "market/fair value." City Hall's recent decision to let AEG sell seized lands means "they 'flipped' the property," declares Marko Mlikotin, president of the California Alliance to Protect Private Property Rights. He calls the resale by private developers of lands taken via eminent domain "egregious."
"The CRA was using public dollars to seize private properties. Shouldn't that property revert to the original owner?" he asks.
Now, in response to the wizened California governor's better judgment, the L.A. CRA and City Council are deciding to kick and scream all the way to the bitter end.
California Professional Firefighters president Lou Paulson tells the Mercury News: "The Redevelopment Agency is basically saying that developer profits are more important than schools, public safety, libraries and other core services."
Of course, that's coming from a firefighter -- who would directly benefit from Governor Brown's idea. But regardless of affiliation, it's the truth: All profits and taxes generated by a CRA-commissioned project are recycled back into the CRA's bank account instead of into the general community.
That cash is then slated to support other beneficial developments -- we're just not sure, given the CRA projects we're familiar with, that they're nearly as cost-effective as they could be. Or necessarily "beneficial" at all.
Some public commenters at the CRA's Friday meeting felt the same way:
Governor Brown knows the money-wasting ways of redevelopment agencies all too well: At the beginning of his term as Oakland mayor, Brown was all gung-ho about a certain "10K initiative" to lure 10,000 residents back into Oakland's ghetto parts -- and quickly learned from his mistake.
Fast-forward to last Friday: The CRA's "special" board meeting that pushed this whole thing through to City Council was in direct violation of the law. It wasn't declared 72 hours in advance, like any decision of its caliber should have been, and its entire agenda was never disclosed beforehand (total funds being transferred rose by almost $50 million during the proceedings.) Ever read the Brown Act, guys?
"Apparently, they don't think they have a case to make, so they decided to try and create facts on the ground. The Governor's proposal warrants a serious, thoughtful discussion," Tom Dresslar, a spokesman for California State Treasurer Bill Lockyer, told the Mercury News.
As for the governor's reaction, the Los Angeles Times reports that "Brown hoped the Community Redevelopment Agency was not planning on 'squirreling money away for the indefinite future when our schools, police and firefighters are in need of this funding.'"
The state has not threatened specific legal action. District Attorney Steve Cooley has received citizen complaints of the CRA's possible violation of the Brown Act, but likewise has yet to respond.
In addition, Hollywood activist Bob Blue (from the Felipe Fuentes article above) finds that the CRA has committed the following violations:
State and City Ethics Laws Violations:
CRA/LA Staff members, Management, the CEO and other personnel were involved in preparing the Agenda and CRA report. These persons all have a financial conflicts of interest in this matter and should not have participated in the preparation of material or the presentation of that material to the CRA/LA Board of Commissioners. ... The CEO of the CRA/LA did not properly recuse herself.
Rushed Process in Haste, by-passing Public, Financial, and Legal Scrutiny:
The leadership of Los Angeles with the full knowledge of City Council members and the Mayor is RUSHING and bypassing the normal orderly process in an apparent attempt to shield State Property Tax Increment funds from the State of California without any thought, legal, or financial analysis - This is a dereliction of their legal, ethical, and fiduciary obligations to the public.
Blue also points out that the L.A. City Attorney is representing both parties. And that the L.A. mayor is the one who appointed the CRA commissioners in the first place. Can you say nepotism?
At last week's surprise meeting, CRA board chairman Kenneth Fearn made the following changes to the city agreement:
Instruct the Chief Executive Officer (CEO) or designee to increase the amount of the available under the Agreement by 5% ($45 million) or $930.000.000 in order to ensure that the work program of all Regions and corresponding project areas are reflected in the list of projects (Attachment A); and,
Instruct Chief Executive Officer (CEO) to negotiate within the Cooperation Agreement the designation of a Successor Entity to implement the work program on behalf of the City upon the conclusion of CRA/LA's statutory authority; and. that such Entity be either a non-profit organization or development corporation approved by the City Council and managed by the CEO. Chris Essel. with support from designated members of her management team and staff.
Writes former LA Daily News editor Ron Kaye of the self-interested revisions:
Essel and other CRA managers are going to be the ones who negotiate the details of the deal that preserves their jobs and protects their enormous salaries CalPERS pension and health benefits.
That is a blatant conflict of interest. It's why Essel slipped out of Friday's meeting just before Fearn amended the staff proposal with that provision.
We've received a barrage of e-mails from citywatchers today, infuriated by the CRA and City Council's complete disregard for proper protocol.
"This is collusion," writes L.A. activist Joyce Dillard in a letter to the City Council. "This also creates an entity that would be eligible for Community Reinvestment Act benefits without bids or competition. ... Only capital improvements are addressed and not operations and maintenance and no stated responsibility to maintain and monitor infrastructure. There is no cost-benefit analysis to commit tax increment dollars to these projects if the redevelopment law is repealed or the CRA/LA is abolished."
In a wave of panic, the city governments of Oxnard, Napa, Fremont, Riverside and Citrus Heights have all made similar moves since Friday.
At today's L.A. City Council meeting, "confusion" over the CRA agreement and a rowdy public-comment period led councilmembers to delay their final vote until January 25, and probably beyond. Sigh. We'll keep you posted.
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you’ll never miss LA Weekly's biggest stories.
- Hot in the City Tonight: DUI Crackdown Hits L.A.
Sun., Oct. 11, 1:00pm
Sun., Oct. 11, 3:30pm
Sun., Oct. 11, 6:30pm
Mon., Oct. 12, 7:00pm
- Historic Marijuana Dispensary Legislation Signed Into Law
- L.A. Officials Approve Raising Your Rent in the Name of Earthquake Safety