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Now It's the Public’s Turn to Kill Off the CRA

MY TAKE - “No system can survive corruption and incompetence.”  Too bad that statement is false.  The Corrupt Redevelopment Agency of Los Angeles (CRA/LA) has survived since 1948 until the California Supreme Court killed it on December 12, 2011. That’s 63 years of harm.   This was the first chance the Supreme Court had in the last 63 years to kill the CRA’s, since no Governor had the guts to sign a bill terminating this essence of Crony Capitalism.  In 2011, Governor Brown signed AB 26 which abolished the CRA’s statewide, but he could get AB 26 through the legislature only by making a Faustian bargain.  He had to also sign AB 27 which would allow certain CRA’s, like the one in Los Angeles, to return from the grave like a zombie feeding on tax dollars.

After AB 26 was law, the billionaires ran to the Supreme Court crying “Save us. Save us,” but in a move no one anticipated, the California Supreme Court redeemed its last 25 years of championing the 1% over the 99% and it killed off the old CRA’s and it aborted the new CRA’s by declaring AB 27 unconstitutional.

Now,  it’s the voter’s turn to act to make certain that the corrupt Legislature does not once again bring back the CRA’s, but first to recap why the CRA’s epitomize crony capitalism.

During its long life, the CRA/LA did many horrible things.  The worst thing was the siphoning of billions of property tax dollars away from the general fund into the CRA/LA’s own bank accounts.  

Until Prop 22, which the voters passed in November 2010, the City Council had the power to dip into these CRA funds for the benefit of the public, but the corrupt City Council refused to touch the CRA funds. Instead, all councilmembers lied to everyone saying that the city had no money, when in fact the City had hundreds of millions of dollars in its CRA bank accounts. These funds were set aside to coddle millionaires and billionaires like CIM Group and Eli Broad.

Currently, the CRA/LA owes over $3 Billion ($3,028,921,563.93).  That means, the Los Angeles taxpayers owe this much money for all the gifts that the CRA/LA has given to millionaires and billionaires over the years.  In 2011 alone, we paid $422,272,560.01 on that $3 Billion debt.  The CRA is why the City is broke.

Let’s see how much harm the CRA has caused us Angelenos.  Because so much cash went into the CRA, we were unable to keep up our infra-structure.  As we know, “a stitch in time saves nine.”

For example, in 1980, the City agreed to take care of the trees and sidewalks but it soon it ran out of money the funds to do so.  Now the back log is $1.5 Billion just to repair those sidewalks.  If the CRA had not taken the tax revenues all these years, then the sidewalks would have been repaired before a condition became serious.  It takes a lot more money to correct a 15 year old problem than a 2 year old defect.

But wait, it gets worse.  The City now proposes not only to dump the $1.5 Billion repair costs on to property owners, but also to charge owners a 40% surcharge on the repairs.

Here’s another nefarious way CRA has seriously hurt Angelenos, and you’ll hear a lot more about this in the coming months – ending Prop 13.  There will be lies, large lies and humongous lies about need to end Prop 13.

Prop 13 operates in reverse to CRA.  While the CRA was taking more and more taxes away from city government, Prop 13 has been giving more and more money to city government.  Prop 13, however, placed California on a diet by restricting how fast the property taxes would increase, but in return it gave us something extremely valuable – stability.

The reward of Prop 13 is that owners who stay put in their local communities have low property taxes.  Society benefits when people stay 20, 30, 40 50 years and identify with their community.  When property does change hands, the buyer makes an open-eyed decision whether to buy this retail store or this home with the re-assessed property tax.

Thus, under Prop 13, property taxes increased in a reasonable fashion based upon the individual decisions of each new property owner.  With the CRA, however, the city’s tax base shrunk each year and no one had a say in the disappearing tax revenues.  The CRA with its Kelo eminent domain could take any property within its area and remove it from the tax rolls, leaving everyone else to shoulder the burden of the infra-structure.

Societies hold together when each part does its share.  With property taxes, all the owners agree to dump thousands of dollars into the “tax pot” and in return, the city will maintain the services we need for a decent life; police, fire, roads, sewer, parks, libraries, etc.  When certain huge land owners do not contribute, the social compact is broken.  It is worse than their getting a free ride.  Their huge projects over-burden the infra-structure leaving us to pick up the tab or forgo upgrades.

Bunker Hill, for example, will have evaded about $1 Billion in property taxes when it expires in 2022.  Yet, this foolish project is perhaps the greatest cause of clogged freeways and bad air in the city.  

Before Bunker Hill, Los Angeles was decentralizing itself.  It takes but a moment’s reflection to realize that only a fool or a crook would reverse the natural trend and construct a huge urban core so that thousands upon thousands of workers from a 5,000 sq. mile area would be converging on one point!  

The only people who would develop a super high density urban core would be people who owned property at the core.  Everyone else is the loser!  But, that is exactly what the CRA forced upon Los Angeles.  Almost one hundred years ago in its 1915 Traffic Study, the City explicitly warned about the greed of property owners who will demand extreme density to make money for themselves while degrading the entire city.  Hence, we have Bunker Hill and the recent CRA Hollywood disasters and a city that cannot provide basic services.

The CRA is a ‘government owned construction company’ with no need to heed market forces nor to give any thought to quality of life. It builds on one principle – whatever makes the most money for the developers who fund the city councilmembers.  That means super high density within a very limited space.  And, the profits come mostly from gifts of taxpayer’s dollars, while the projects are free market fiascos.

Without the CRA, developers would have had to build where people wanted to go, and for most people that means – ease of access.  Sitting in a car for an hour is not ease of access.  Riding a bus or subway is not ease of access.  Without the CRA, commercial centers would have been dispersed throughout the basin.  It is the free enterprise principle of Supply and Demand.

We have known for decades that Angelenos flee density.  Hollywood is a perfect example how its excessively dense CRA projects caused an exodus so that Hollywood lost 6% in one decade while the less dense parts of the City gained population.  

Did anyone have the foresight way back in the 1950's not to concentrate in one area?  Yes.  The county court system.  It did not locate all the court houses downtown.  Instead, it spread them throughout the county. From Pomona to Sant Monica from San Pedro to Newhall and all places in between , we have courthouses.   

The CRA builds according to how much loot it can make for a developer which means super high density in a centralized location.  The Courts evenly distributed their facilities so they were accessible to the people.

The Governor did his part, the Supreme Court did its part and now we come to The Voter.  Now is the time for the public to contact their assembly members and senators and tell them not to extend the CRA and not to revive it under a different name.

INFO: Contact the Governor's Office here.
Look up your State Representatives here.

(Richard Lee Abrams is an attorney in Los Angeles. He can be reached at: ) –cw

Tags: CRA, Community Redevelopment Agency, Hollywood, City Council, California, California Supreme Court

Vol 10 Issue 5
Pub: Jan 17, 2012