01/11/2012 05:06 pm ET Updated Dec 06, 2017

LA's Community Redevelopment Agency: City Council Votes To Skip Successor Agency Duties

This story comes courtesy of The City Maven

By Alice M. Walton

A divided Los Angeles City Council voted today to not act as the successor agency to the Community Redevelopment Agency, which will cease to exist on Feb. 1, citing concerns over unknown liabilities and the financial hit to the city’s General Fund.

The 9-3 vote was in line with recommendations from Mayor Antonio Villaraigosa, Controller Wendy Greuel, the city administrative officer and chief legislative analyst. The three dissenting votes were Councilmen Ed Reyes, Eric Garcetti and Richard Alarcon, with Council members Jan Perry and Bernard Parks absent.

Successor agencies will be responsible for winding down CRAs, a job that could go on for decades. Because that duty would include taking on redevelopment agency employees and their pension liabilities, the cost to the General Fund could range from $30 million to $109 million, according to a report released by the CAO and CLA.

“Redevelopment as you all know it is gone,” said CLA Gerry Miller.

Successor agencies will be overseen by an oversight board, which will include two members appointed by the Los Angeles County Board of Supervisors, two members appointed by the mayor of Los Angeles, and one member appointed by the county Flood Control District, county Superintendent of Education and chancellor of the California Community Colleges for a total of seven members.

The Community Redevelopment Agency currently has 86 projects and a total development cost of $4.8 billion. Twenty-nine projects are currently in the process of being built, accounting for 5,000 construction jobs, according to CRA CEO Chris Essel.

In voting to opt out as a successor agency, the Los Angeles City Council agreed to work with state legislators to draft language that could allow the city to take on the role at a later date. In the meantime, the first county agency to submit a resolution to the county’s auditor-controller will be named the successor.

At a committee hearing earlier in the morning, representatives from the Central City Association, Los Angeles Alliance for a New Economy, and various unions lobbied for the city to act as the successor agency.

*Updated 1:43 p.m.

Statement from Councilman Tony Cardenas, chair of the Housing, Community and Economic Development Committee:

The state and the courts put us in a tail spin and have forced our hand. While I would like to remain in control of our own economic destiny, it seems that the city of Los Angeles can not become the successor entity for the CRA without incurring massive liabilities and putting the city’s financial future in jeopardy.

As stewards of the city we cannot allow economic development to come to a standstill. We must continue advocating in favor of the redevelopment projects that have already been approved for our region’s neediest communities and we should work to develop new and innovative ways to fund more projects that continue to revitalize our city.

Statement from Councilman Paul Krekorian:

The State Supreme Court ruling that will abolish the CRA has raised understandable public concern about potential impacts in the redevelopment areas in the East Valley and elsewhere. Examining these impacts has been of paramount concern to me, especially regarding Valley Plaza in North Hollywood. I’ve never wavered from my longstanding commitment to economically revitalize Valley Plaza and the surrounding area, which has been ignored for too long, and I never will. Fortunately, it appears that the status of the CRA will have virtually no impact on the plans that are under consideration for the creation of an exciting new development at Valley Plaza.

Today, the Council voted against the City becoming the successor agency to the CRA to take over its operations as it winds down. It was clear to me that the risks associated with doing so far outweigh the benefits. I cannot in good conscience support any move by the city that could further jeopardize its financial standing by assuming a level of unacceptable risk.

With or without the CRA, we are going to create a vibrant development at Valley Plaza that will create jobs and revenues, improve the economic health of the region and meet the needs of the neighborhood.

Dissolution of the CRA LA 01-10-12

Greuel letter on CRA