Splitting of Downtown Redevelopment Area Proposed

By HOWARD FINE
Staff Reporter

In an attempt to get around a spending cap on downtown redevelopment and coax developers to pursue new projects, the L.A. Community Redevelopment Agency has proposed splitting much of the current downtown redevelopment project area into two new zones.

Last month, the L.A. City Council instructed the CRA to proceed with planning for the two redevelopment project areas. One of these areas, called City Center, encompasses the Historic Core, Garment District, and Toy District. The other zone, known as the Central Industrial project area, takes in the light industrial zone around Alameda Street.

This week, land-owners and tenants in the proposed City Center project area will vote to elect members to an advisory committee. Over the next six months, the CRA and this advisory committee will be preparing fiscal and environmental documents for the two new zones. A final proposal is expected to be presented to the City Council in May or June of next year.

"This is something we absolutely must do," said City Councilwoman Jan Perry, who represents much of the downtown redevelopment zone. "These areas have been left behind for too long and have become the stepchild of downtown. The only way new development is going to be brought into these areas is with some government assistance."

Areas left out

Much of the recent development in residential and office neighborhoods downtown have left out these two proposed project areas. Although Perry and other city officials are confident the new areas will be approved, they will require several million dollars in additional city funds to get started. A severe budget crunch might force a delay.

Meanwhile, much of the massive 1,500-acre Central Business District, which has finally reached a spending cap imposed 20 years ago by the Council in response to a lawsuit, will be closed out.

The cap was agreed to as part of a legal settlement to a lawsuit filed by former Councilman Ernie Bernardi and other private taxpayers in the mid-1970s. Bernardi and the other plaintiffs objected to what they saw as taxpayer subsidies for wealthy developers building the huge skyscrapers atop Bunker Hill, while other parts of the city received scant attention.

Under the court-supervised agreement, the CRA was limited to $750 million of tax increment dollars over the lifetime of the Central Business District redevelopment project area and $75 million in tax increment dollars in any given year. (Tax increment dollars are additional sales and property tax dollars generated by new development.)

Not all of the Central Business District will be merged into these two new zones. The skyscrapers on Bunker Hill and in the Financial District on the western edge, the area around the Staples Center on the southwest and the Civic Center area in the north will remain in the CBD. These areas, CRA officials say, either have little blight in them or already have substantial redevelopment projects taking place.

Much of area blighted

But much of the rest of the Central Business District is plagued by blight, with an aging and unsafe building stock and a burgeoning homeless population. A new redevelopment area would allow the CRA to use its powers of eminent domain to assemble large blocks of land and make available funds to attract developers coming in with new projects. Over time, these new projects would generate revenue that the CRA could then use to fund future projects in the area.

CRA Deputy Administrator Don Spivak said the initial plan was to create one new redevelopment area, but after meetings with residents and property owners, it was decided to split it up into two new project zones.

"We learned that the issues in the Historic Core and the retail area around the Garment District were substantially different than those in the industrial core to the east," Spivak said.

"In the Historic Core, we've got several million square feet of vacant space in some 50 to 60 buildings that used to be occupied by banks and financial institutions; those are ideal for residential and mixed-use development," Spivak said. "But in the industrial area, there is substantial need for larger industrial sites and rehabilitation of older buildings that are structurally unsafe."

Spivak added that several developers have expressed interest in residential projects following the example set by developer Tom Gilmore. Over the last three years, Gilmore has been converting old bank and office buildings around the intersection of Spring and Fourth streets into hundreds of lofts. As of last summer, 95 percent of the 235 lofts completed were leased; another 200 units were under construction.

Other developers have also been turning Historic Core buildings into lofts, including Capital Vision Equities, which is turning the former Pacific Electric Building into 300 loft units and Oxford Street Properties, which is converting a building at Third Street and Broadway into 48 lofts.

Spivak said that starting up two new project areas would require several hundred thousand dollars in city funds a year during the first three to four years before they would approach self-sufficiency.

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