Cecilia Estolano is chief executive officer of the Community Redevelopment Agency of Los Angeles, a city agency that makes strategic investments to create economic opportunity and improve the quality of life in the city. In August, the state of California siphoned about $70 billion from its 2010 budget to help balance its own shortfall, and made plans to take a total of $100 million from the agency over the next three years. Estolano discussed this challenging situation, as well as the agency’s future plans, particularly its aggressive investments in Clean Tech.
The Architect’s Newspaper: How will the state-initiated cuts affect the agency?
Cecilia Estolano: It effectively wipes out our new tax increment financing [new funds derived from local property taxes], and we’ve had to slash our entire work program—small business loans, infrastructure, new parks. Work with private developers. We’re slashing every category. The cuts are so deep that in some cases we’ve had to dig into our affordable housing funds, which we really don’t want to do.
But we do have reserves that we’re using to fund a work program of about $380 million. We’ve been trying to spend 30 percent of our available resources, distributed in 32 project areas all around the city. We’re still in business, but we’re not able to add any new projects. Last year we were able to put $190 million worth of investment on the street. When I got to this agency we were doing about $80 million. It’s going to drop a lot this year. There’s less activity going on in the community to go along with the fact that the state took so much money from us. We still have $140 million in commitments for projects that we’re going to try to get out the door this year.
Had you prepared for the economic downturn?
We’d planned for a downturn— we had anticipated a 46 to 47 percent decline in tax increment revenues. But then the state came along and decided to balance its budget on our backs. Still because of the bleak situation we need to continue to lay the groundwork for an economic recovery: infrastructure, business assistance, program EIR’s to make it easier to develop once money starts flowing, funding biomed and entertainment, establishing a clean tech corridor on the east side, and developing the Crenshaw corridor where it intersects with Gold Line. That includes infrastructure improvements, transit-oriented development, and affordable housing on Crenshaw Boulevard south of the 10 Freeway.
Was the state’s intervention legal?
No, it was unconstitutional. Helping the state pay off its deficit is not a redevelopment purpose. There is no net benefit to anyone other than the state of California. It’s not serving redevelopment, and it’s also not keeping money in the area where it’s generated. We sued the state last year and won. They are appealing that money. We’re going to sue them again. We think we’ll win, but because we’re a responsible agency we have to escrow that money and can’t use it until we win. Legislators counted on the fact that we’d sue and it didn’t matter because they wanted to balance their budget based on a house of cards that will fall apart. It’s clearly unconstitutional but it’s going to take a long time to resolve.
How can you fix this disruptive pattern initiated by the state?
I think we’ve seen a tremendous amount of support from voters for protecting local government resources. There are numerous, and growing movements for reform. The Bay Area Council is calling for a constitutional convention. California Forward has a package of reform measures to put on the ballot. The League of Cities wants to put something on ballot to protect local resources. The legislature is looking at a committee on reform. Everyone understands that the system is broken. The question is how to fix it, and will the voters trust the legislature to fix itself. They don’t.
You may see significant reform of California’s public finance system. The state can’t grow out of this crisis. Not with troubling rules like a two-thirds vote to pass the budget, a two-thirds vote to raise taxes, Prop 13 [which significantly limits how much the state can collect from property taxes]. So the state steals money from localities to balance its budget. It has people furious. That’s why you’re seeing all these reform proposals begin to gain steam. We haven’t seen the worst. When these cuts begin to take effect Californians are going to be fed up. They’re really going to be angry because they’ll be paying more and receiving substantially less.
What growth areas should architects be aware of?
Transportation is a field that’s very important. The people of Los Angeles County voted to raise their sales tax to get billions for public transit. It will spur money for real estate. High-speed rail will literally change the landscape of California. **The Anaheim to LA segment is first in line. How that gets aligned and the way it changes development patterns in the region should be of particular interest to architects. Other bright spots for architecture include universities, particularly in the community college districts, where there’s still some investment flowing.
And Clean Tech. Our Clean Tech Corridor (www.crala.net/ct) on the east side of Los Angeles provides space to companies that plan to launch projects for heavy manufacturing [related to Green technologies]. It provides space for companies and inviting live/work opportunities for designers. We want LA to be an entrepreneurial hub that attracts the creative intellectual capital that is powering the country. We think it can be the center of LA’s manufacturing base. We’re about to hear from METRO about whether they’re going to purchase rail cars from the Italian rail manufacturer AnsaldoBreda S.p.A. If so they will locate their manufacturing facility in the area, creating 400 jobs. Their contract would be to build additional cars for the city’s new lines and repair or rebuild cars already in service. This could make LA the most important public transportation manufacturing center in the country.
[METRO’s Board voted today to approve the purchase of 100 cars from AnsaldoBreda contingent on the company’s agreement to several terms, including an irrevocable letter of credit, within 30 days.]
Tell me more about the Clean Tech Corridor. How was it set up?
The corridor itself is much bigger than the property we own. We own 20 acres. We’ve spent $14 million purchasing a brownfield site from the state California located between Washington and Olympic Boulevards just west of the LA River. It used to be a Crown Coach site that was going to become a prison. We used brownfield grant money to clean it up. That investment was $14 million. We’re also investing in infrastructure—new roads and sewers, an investment in revitalizing the LA River, and parks—and in new housing. We’re also trying to spur more private activity and attention to the clean tech corridor. We’re a catalyst; we can set the tone and articulate a vision. We want to spur private investment that’s much more powerful than our little dollars. The goal is to create 5 to 10 dollars for every dollar invested.
How can architects be part of the Clean Tech Corridor?
When there’s a lull you have to plan for the economic recovery. Architects can play a role in that. Right now we’re in a planning mode. We’re trying to reuse our industrial lands and reshape them in ways that can be more effective. I think you’re not going to see ground up construction. You may see the adaptive reuse of industrial spaces that will require creative architecture. It’s not just that the product is green but the buildings where they’re made have to be green. Architects are leading the way in coming up with more efficient structures; helping us come up with cool industrial spaces and remake them into flexible, effective spaces.