LOS ANGELES -- In the face of spirited opposition from wealthy home owners, the Los Angeles Community Redevelopment Agency plans to sell nearly $20 million of tax increment bonds within five years under a plan adopted last week establishing an earthquake recovery district in the city.
But the first bond issuance is not scheduled until October at the earliest, and may not happen at all if the home owners go ahead with a threatened lawsuit against the agency.
More than 2,100 residents from Sherman Oaks, a hillside community 13 miles northwest of downtown Los Angeles, have signed a petition opposing the creation of the Sherman Oaks project area. The petition cites numerous complaints, including past troubles with the massive redevelopment agency.
"Number one is mistrust of the Los Angeles CRA," said Richard Close, president of the Sherman Oaks Homeowners Association.
"We've seen what they've done in other parts of Los Angeles," Close said. "Primarily, they are unsuccessful, they are dictatorial, and they are not needed in Sherman Oaks."
The 740-acre project area is the first of six proposed redevelopment districts to receive the approval of the Los Angeles city council. The districts are designed to help residential and commercial property owners repair damage from the Jan. 17 Northridge earthquake.
If all six districts go forward, the agency would be authorized to issue as much as $140 million in tax increment bonds to finance the repairs. The Sherman Oaks district is located in the hard-hit San Fernando Valley, as would four of the other districts. The sixth would be in the Hollywood area.
But none of the proposed districts has been nearly as controversial as the one established in Sherman Oaks and a small portion of Studio City.
The redevelopment agency estimates that the Sherman Oaks project will require four bond issues over five years -- in amounts of $4.8 million, $6 million, $4 million, and $4.8 million -- for a total of $19.71 million.
The proceeds will go first to condominium owners who have not been able to obtain other funds to repair their homes. Condo owners were among the hardest hit by the quake.
After October, the project could be expanded to include other home owners, business owners, and repairs to streets and other infrastructure.
"The whole goal of the recovery project is to help repair and return properties to the level prior to the earthquake," said Joe Nocella, a finance officer with the redevelopment agency. "That was a general misconception among the people -- they thought it was a redevelopment project."
Nocella said a recovery project can be as short as five years, while redevelopment projects typically stretch as long as 45 years.
Tight restrictions have also been placed on the agency's use of eminent domain. Redevelopment officials will be able to seize properties only if they have been abandoned.
But those constraints have not satisfied many Sherman Oaks residents, who are well aware of the agency's past troubles, including numerous lawsuits, charges of overspending, and accusations that the agency aggressively seizes land at the expense of private property rights.
"I haven't really determined what the CRA is trying to do," said Alvin Rachman, owner of Sherman Oaks Camera & Sound. "Most of the people in Sherman Oaks are in a high-income bracket, so they are always going to have antagonisms against an agency like the CRA."