Even as the L.A. City Council temporarily pulled the plug on a huge San Fernando Valley redevelopment project area last week after questioning the ability of the Community Redevelopment Agency to pull it off, the CRA is quietly moving to expand its influence.

Specifically, the CRA is seeking to create two other new redevelopment areas (in downtown and San Pedro) and to expand or revive several others.

It wants to expand the existing Little Tokyo area, to regain its power to evict tenants and property owners in an existing project area in North Hollywood, and to revive that same authority in five other areas around L.A., including Chinatown and Hollywood.

"This represents a substantial drive to start new areas or to complete work in areas that we are already involved with," said CRA Administrator Jerry Scharlin.

But Councilman Alex Padilla doesn't think the CRA is in any position to expand. And he made that clear last week when the council's Housing and Community Redevelopment Committee decided to put the 6,835-acre Northeast Valley project on indefinite hold.

"The (project) is simply too large for the staff and other resources the CRA currently has," Padilla said. "If the CRA can't tackle a project of this magnitude in my district with the resources they have, then we must look very hard on a case-by-case basis at whether other new project areas should be created."

Others outside City Hall agreed.

"I am very concerned about the budgetary implications of trying to do more than the agency is already doing," said J. Eugene Grigsby, director of the Advanced Policy Institute at UCLA, who did a study two years ago evaluating the CRA. "There is no question that many areas in this city still need redevelopment, but the big question is, how you pay for it? You typically don't see any positive revenue streams from a redevelopment project until five or 10 years out. So where is the money going to come from to start these projects?"

The expansion proposals are contained in the CRA's 2000-01 budget plan, which will be considered by the L.A. City Council later this month. The $389 million, balanced spending plan essentially paints an improved picture of the agency as revenue from existing projects has picked up in recent years and debt service has fallen.

The budget even includes a request by Scharlin to add 20 people to the CRA staff, which now stands at about 180 people. If approved, the new hires would begin to reverse staff cuts that have seen the agency shrink by nearly 50 percent over the last 10 years.

It also calls for $8 million for studies and other work needed to move ahead on the proposed new project areas and additions, which are likely to take at least a year to establish.

How would the financially strapped agency pay for that expansion if it eventually goes ahead?

In his June 1 memo to L.A. Mayor Richard Riordan and the City Council, Scharlin acknowledged the possibility that more funds might be needed to start up new projects or expand existing ones. And that money may have to come from city coffers.

But, he said, "In our view, the financial status of the agency should not exclude the possibility of approving new redevelopment areas. It is our belief that every community that is blighted, as defined by redevelopment law, should have available to it the tools of redevelopment."

Padilla said he would have a problem with allocating more city money.

"I couldn't contemplate making the commitment for funds until I have a high comfort level with the people administering those funds," he said. "And I definitely do not want to see funds approved for one project being transferred to another project down the road. I would urge that any monies approved for one project stay within that project."

Eyeing new projects

It was just a year ago that the CRA was mired in a financial crisis, facing an operating deficit of up to $8 million a year because tax revenues from redevelopment projects weren't coming in fast enough to cover staff and resource costs.

Then-Administrator John Molloy resigned after tangling with the City Council over the need for more staff. Mayor Richard Riordan quickly named Scharlin to take his place.

Scharlin warned last week that there is only a narrow window of opportunity to create a new redevelopment project in the downtown area.

In the last year or two, developers have shown renewed interest in the region. But later this year, the Central Business District redevelopment area is due to hit a court-imposed $750 million cap that would force the CRA to turn over any additional revenues from the project area to other government agencies. That could prevent the CRA from using those funds to start new projects in the area.

So the CRA wants to close out the existing project area and create a new one so it can continue to revitalize areas in the historic core; the exact boundaries would be defined after studies are done determining the extent of blight downtown.

The CRA faces no such legal difficulties in the harbor district, the location of the other proposed new project area. Rather, CRA Deputy Administrator Don Spivack said the district just west of the existing Beacon Street redevelopment project area contains many older housing units and "obsolete" commercial buildings.

The agency has also proposed adding 40 acres to the existing 67-acre Little Tokyo redevelopment zone, to include the area to the east that now contains artists' lofts. "While there are lofts there, the retail and other commercial buildings in that area are rundown," Spivack said.

In the Laurel Canyon project area in North Hollywood, the CRA wants the City Council to grant it the power of eminent domain. Spivack said that when the redevelopment area was initially approved after the 1994 Northridge earthquake, it only allowed for the rehabilitation of existing structures. The CRA did not then have the authority to come in and use the power of eminent domain to buy out property owners and assemble large tracts of land for redevelopment.

The CRA is now seeking to obtain that same eminent domain power for the entire Laurel Canyon project area.

More projects expected

In addition, the agency wants to revive its eminent domain authority in five other areas: Hollywood, the south end of the Alameda Corridor near L.A. Harbor, Chinatown, Pico Union East and the existing Little Tokyo project. Back in 1986, Spivack said, a change in state law forced the CRA to seek 12-year eminent domain authority for those and other project areas. That power expired in 1998.

"In all of these areas, we believe there is still blight and we will have to prove so before we seek extension of eminent domain authority," Spivack said. "But with the economy the way it is, we are expecting more projects to come down the pike in the areas where eminent domain authority has lapsed. Without that authority, it is doubtful the developers could ever assemble the land they need to make the projects work."

For reprint and licensing requests for this article, CLICK HERE.