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By HOWARD FINE

Staff Reporter

A five-year effort to overhaul economic development in L.A. comes to a head this week as the City Council considers a plan to essentially kill two big agencies and fold their operations into a new department.

The new agency, to be called the Economic Development Department, would handle some of the city's most important business inheriting almost all functions of the Community Redevelopment Agency and the Community Development Department.

Both entities employ hundreds of people, have huge annual budgets and oversee multibillion-dollar economic development efforts. The restructuring would also shift power from the mayor to the council.

Mayor Richard Riordan, who made consolidation of the city's economic development functions a platform of his first term in office, opposes the plan because it would give the council sole power to decide redevelopment issues, as well as the power to appoint the new department's chief and its advisory board.

Riordan currently has the power to appoint CRA board members, who decide redevelopment issues before passing them along to the council for final approval.

"The Riordan administration has taken the position of being obstructionist," said Councilman Mark Ridley-Thomas, a key supporter of the plan. "I've grown impatient with any further delay. This city deserves better economic development."

Deputy Mayor Rocky Delgadillo said the mayor is not being obstructionist, but has several legitimate concerns, like how the restructuring would be affected by charter reform and how much money would be saved by combining economic development functions.

Riordan's opposition could stall the plan, which already has been delayed several times over the last five years.

"With this whole process taking so many years, the city is lagging behind its competitors who have consolidated their economic development efforts," said Ed Blakely, professor of urban planning and development at USC. "Oakland, Chicago and Philadelphia have all consolidated their economic development programs. Some cities have even incorporated planning into their consolidations."

Blakely said that, without consolidation, developers would grow increasingly frustrated and take their projects to other cities.

"If I'm a developer trying to do a project in L.A. and need to go to two or more different agencies with different timetables, I would go to a city without this problem," Blakely said. "Business has become much more sophisticated about packages that cities offer and L.A. has to compete."

The plan now being considered calls for the council to declare itself the city's redevelopment agency and responsible for making key redevelopment decisions. Currently, the CRA's five-member board makes the initial decisions and forwards them to the council.

The CRA's economic development functions would be transferred into a new Economic Development Department, along with the economic development functions of the city's Community Development Department. Most of the CRA's housing program would be transferred to the Housing Department.

Last month, the City Council's special joint committee dealing with economic development issues approved the plan over Riordan's objections and sent it on to the full council, which is scheduled to take up the issue this Friday, Jan. 15.

If the council approves the plan, it would then be sent to Riordan. Delgadillo said last week that the mayor is undecided on whether to sign or veto the proposal. If he vetoes it, council members who back the plan said they believe they have the 11 votes it would take to override.

If signed into law, the plan would still take at least a year to implement, meaning the earliest it could take effect would be the summer of 2000.

The plan is being pushed by three City Council members: Mike Hernandez, Mark Ridley-Thomas and Rudy Svorinich. All three have major redevelopment project areas in their districts.

"The way things are now is really inefficient," Hernandez said. "We often get requests for the same monies from different agencies. There is no single economic development mission or vision guiding these requests. If we combine departments, we can leverage these dollars better."

Hernandez, Ridley-Thomas and Svorinich all denied that their push for CRA consolidation has anything to do with a recent CRA report detailing a projected $40 million funding shortfall over the next five years. The December report cites various factors as causes of the projected shortfall, including a state requirement to share property-tax increment revenues.

But Svorinich said that while the low collection rate is a concern, "it is not a doomsday scenario and is not an urgent factor in our decision to move ahead.

"From my perspective, I'm more concerned that we move on this restructuring now, when times are good," Svorinich added. "Anybody in business knows you restructure a business to make it better when (the economy) is doing well. You don't want to do this during a recession when everyone is scrambling just to keep afloat."

Many of the details of how consolidation takes place would still have to be worked out, and expected staff cuts would likely draw vehement opposition. CRA Administrator John Molloy said last week that the agency's staff already has been reduced from 350 at the beginning of the decade to 210 today. Molloy said he would oppose any further staff cuts.

According to one observer who has had frequent dealings with the CRA, the agency is so thinly staffed now that projects move "exceedingly slowly" through the agency.

An additional concern, according to Blakely, is the separating out of housing from redevelopment efforts.

"The trend now is toward mixed-use developments," Blakely said. "There has to be a lot more coordination between housing and economic development, not less."

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