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Uncertainty for California developers, construction workers as CRAs disappear

For decades, community redevelopment agencies in California have helped build affordable housing, shopping centers, youth sports fields or other projects to get rid of urban “blight.”

Their record of success is often good, although critics say some redevelopment projects were a waste of money.

To help balance the state budget, Governor Brown last year decided to eliminate the redevelopment agencies – or CRAs. They’ll vanish on Wednesday, leaving builders who work with the CRAs trying to figure out what comes next.

At a recent Central City Association luncheon, top developers presented slideshow updates of projects they hope will shape the skyline of downtown LA, including Farmers Field, the Broad Museum, LA Metro’s Regional Connector. Developer Bill Witte talked about the Civic Park, scheduled to open this summer.

"This is going to slowly add to the development of the Bunker Hill, or re-development of the Bunker Hill," said Witte. Then he caught himself. "We can’t … I’m sorry, can’t use that word anymore," he said as some lucheon attendees chuckled. "The development of the Bunker Hill area."

Joking aside, Witte is trying hard to see the upside of the shutdown of the community redevelopment agencies that his company has worked with for years.

"Well, as a developer, I have to be an optimist," Witte told KPCC in an interview after the luncheon. "Actually a lot of what we do is affordable housing, which is heavily funded out of redevelopment. But I think out of chaos, there is opportunity. "

But that doesn’t mean Witte and other developers aren’t worried about the chaos. His company - the Related Companies of California based in Irvine - is involved with the Grand Avenue project, which aims to bring apartments and shops to some downtown property near L.A. City Hall.

"You know we have a five year-old development agreement that is a binding contract. It does have some redevelopment commitments, not enormous, so there’s gonna be some uncertainty about that. "

Witte says as the redevelopment agencies disappear, developers should remind project partners that contracts are binding.

"One of the challenges for everybody in redevelopment now: there’s no arbiter; there’s no judge," Witte said. There’s no place you go to say, ‘This is OK’ or ‘That isn’t OK.’ So I think you have to kinda create – and that’s what we’re doing now – you have to create your own template for that and then make your case. "

Witte wasn’t threatening to make his case in court, but one reason the City of LA decided NOT to take over its community redevelopment agency was the chance that it would get sued by developers with projects that don’t go forward. Carol Schatz – who heads the Central City Association of LA - says more than 60 people attended a recent meeting of her group’s Housing and Development committee, including some top land use attorneys.

"There are a lot of untied loose ends," said Schatz.

Gov. Brown plans to set up special boards to ease the transition away from redevelopment agencies. Schatz wants him to choose wisely when he decides who’ll serve on those boards.

"We need the expertise of the right people to be appointed to these boards to make sure that we can resolve these, these loose ends," Schatz said.

Carolyn Hull knows about loose ends. She is – until Wednesday – the South L.A. region administrator of the Community Redevelopment Agency.

"Some developers have signed development agreements. Others have loan agreements with us that are in pre-development that haven’t gone to permanent yet," Hull explained. "There are others where we entered into exclusive negotiating agreements but we haven’t actually transferred the land to them, but they have expended a lot of money in putting together site plans to move a project forward. These are uncertain times."

And no developer likes uncertainty.

"Each case has to be evaluated based on where they were with our negotiations," Hull said. "But there are difficult conversations."

Hull says the most difficult conversations are with construction workers. The CRA projects in jeopardy represent hundreds of jobs.

"In an economy where the unemployment rate is high and in communities like this where it’s often double the county average, these type of jobs with the policies that we have in place that insure local hires is critical for these communities moving forward. "

Hull was speaking at a 22-acre site near Baldwin Hills that’s been waiting for redevelopment for decades.