The Los Angeles Community Redevelopment Agency, long the target of criticism from those who say it favors big developers over the needs of residents and businesses it has displaced, has come under even more scrutiny in recent months.

In December, an internal memo indicated the agency could face a $40 million deficit over the next five years because of declining project revenues. And in March, a UCLA study concluded that the CRA's performance has been "decidedly mixed" on nine major projects.

Meanwhile, the City Council is considering putting the agency out of existence by merging it into a larger economic development department and taking over policy decisions itself.

Last week, the Business Journal interviewed CRA Administrator John Molloy, who took over the agency in 1995.

Question: The CRA has come under criticism from so many quarters. Why can't the agency get any respect?

Answer: I haven't the faintest idea who is mad at us, so I'm going to have a difficult time answering that. All I can tell you is that the CRA here in Los Angeles is doing just fine. There are now 30 redevelopment project areas that stretch from Canoga Park on the north to San Pedro on the south, and we are active in each one. We are working on about 120 different redevelopment projects right now, with a total valuation somewhere north of $2 billion.

I think we are doing very well in some of our project areas: Downtown is doing very well, as is Hollywood. And we've just adopted our East Los Angeles Project Redevelopment Area, which represents the first time we've gotten the commercial and industrial areas of East Los Angeles into redevelopment.

Q: What about some of the areas that haven't come along so well?

A: Well, we really don't have any. We have some areas for example, Wilshire Center, which is a recently adopted redevelopment area where our projects are mostly in the concept stage.

Q: But there also are areas like Grand Central Square and the Crenshaw area that a UCLA study said have not performed very well.

A: That study focused on retail jobs. It should be no surprise to anyone in the United States that industrial jobs pay more than retail jobs. That was their finding in a nutshell. Surprise, surprise. It's no secret that the agency's focus for many years has been on retail. Historically, the areas selected for redevelopment have primarily been retail and commercial. That is where some of the most blighted areas have been. There is very little industrial land in our older project areas.

The areas that have been adopted more recently, such as the Eastside and the Council District 9 project just south of the Santa Monica (10) Freeway, and the project we have been considering in the northeast San Fernando Valley, those project areas have a lot more industrial base in them.

Q: What are your plans to improve the performance of some of the current project areas?

A: In downtown, we are clearly on the right track. But we need to do more work in the old historic core. We need to get these old office buildings converted into live-work space. We have a lot of developers interested in doing that right now, so we're going to have to push that agenda forward.

In the Hoover project area, we've got renovations proposed to the Shrine Auditorium. The Coliseum project I think is going to go forward. The new community center down there. But again, we need more work on the individual commercial areas. We're working on trying to get some housing immediately adjacent to Exposition Park.

In Crenshaw, the big push is to try to get the Santa Barbara Plaza project moving forward. We have an agreement with the developer (that) needs to be structured and brought forward for City Council consideration.

The Broadway/Manchester area is another focal point for us. We are in negotiations for a new shopping center there.

Q: Regarding the CRA's own internal memo projecting a $40 million shortfall over the next five years, how are you addressing this?

A: What deficit are you talking about? That $40 million figure was an imaginary thing. I can tell you that we don't have enough tax increment financing to cover our operating expenses. This has been something that has developed over many years. It's because of the real estate recession. As a result, we've had to downsize, and that has been no secret. We are also using our interest revenue, revenue from our loan portfolio and lease revenues. So we have had to mix and match our revenues in order to balance the administrative budget.

Q: We've been in an economic recovery mode for three or four years. Yet the projected deficit goes out for the next five years. Just how long can you blame the 1990-94 real estate recession for this?

A: Again, I must tell you that there is no deficit. We are using other revenue streams because our tax increment financing revenues have not been adequate for operating costs. There is no problem; the agency is financially sound.

Q: What is your reaction to the attempt by the City Council to consolidate economic development functions and merge the CRA out of existence?

A: All I can tell you is that it is an issue that has been discussed around City Hall for eight or nine years. Their emphasis is on the fact that the various economic development programs in the city are scattered among several agencies. There are some folks in City Hall who think it would be good to consolidate them.

I'm not saying that that has ever been interpreted as any sort of negative thing against the CRA. In fact, I think people look at the CRA as one of the strongest economic development tools there is.

Q: Well, what are you planning to do about the council's move?

A: We are going to continue to do our job in the same excellent fashion we have always done. We are going to produce affordable housing, we are going to get new commercial projects under way. We're going to put in the public improvements and the public facilities that we've always focused on. And we're going to make Los Angeles a better place.

Q: Any concluding thoughts?

A: Let me just tell you that you sense more in the way of problems and hostility toward us than I think there is. We sit down here and we don't sense any of that.

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