Be Wary of CRA Claims
The L.A. Community Redevelopment Agency’s claim that it will pump $25 million to $50 million into East L.A., mostly to spruce up buildings, needs clarification (“On Track for Redevelopment in East L.A.,” April 27). Over this past year while I have been a member of the Adelante Eastside Project Area Committee, I have clarified this claim by explaining how very few loans would be made to existing businesses. It seems obvious to me that this claim is being made to help the CRA garner support from small businesses.
The CRA anticipates it will receive $75 million to $150 million of property taxes from the Adelante Eastside Redevelopment Project Area over the next 45 years. Based on this anticipation, the CRA may issue $25 million to $50 million of bonds secured by future property taxes. It will cost $50 million to $100 million to pay the interest on the bonds plus the $25 million to $50 million of principal it borrowed.
As it has done in other L.A. project areas, the CRA will pay itself 30 percent to 36 percent of the $25 million to $50 million for its salaries and administration, about 10 percent to 15 percent for consultants and legal fees, and 8 percent to 10 percent for bond council and bond fees over 45 years. This leaves about $12.6 million to $29 million maximum. Pretty good deal; you give me up to $150 million and I’ll give you back up to $29 million.
The second point, and more important to the people of East L.A., is CRA’s claim that it will use most of this money as loans to existing businesses to paint and spruce up their buildings. The fact is that the CRA cannot loan that much money from bond proceeds to paint and spruce because that will not increase property taxes enough to pay back the principal plus interest on the bonds.
The only way to sell and repay the bonds is to encourage change of property ownership, reassessment for new and bigger buildings, or both.
There are other moneys, however, such as community block grant funds from the federal government and other grants. But all of this money is available without the CRA.
Though the CRA claims to use eminent domain as little as possible, they use the threat of this powerful and frightening tool all the time.
Former PAC member