City of Los Angeles dumps redevelopment agency

The Los Angeles City Council voted today to not become the successor agency to the city’s Community Redevelopment Agency (CRA) when it dissolves on January 31.  The agency dissolution is the result of the California Supreme Court’s recent decision in California Redevelopment Association v. Matosantos .  While legislators scramble to try and delay that dissolution, each municipality with a redevelopment agency must decide whether to become the successor agency, responsible for overseeing the winding-up of the agency and disposal of all assets.  The City’s Chief Administrative Officer and Chief Legislative Analyst advised the City Council that becoming the successor agency would result in substantial liabilities, including the costs of CRA employees becoming City employees.  Real estate developers and affordable housing advocates challenged that assessment, arguing that the risks of abandoning the many projects under CRA’s jurisdiction were far greater.  Though many members expressed concerns about losing the agency’s institutional knowledge and noted its critical role in economic development and urban revitalization, the City Council ultimately voted against becoming the successor agency.  Instead, the Council asserted that it will work with legislators to clarify the potential liabilities and explore the possibility of choosing to become the successor agency in the near future. 

The County of Los Angeles and other cities and tax districts within the County may now elect to become the successor agency to the CRA.  In the very likely event that no jurisdiction makes that election, the Governor will appoint three (3) County residents to act as the successor agency.  In addition, the City is now faced with deciding how to create a new economic development engine, and how to fund it.  The City Council’s decision will likely stir a significant reaction from legislators in Sacramento and other municipalities across the State; for developers, the City Council’s decision only expands the aura of uncertainty created by the Supreme Court’s decision.