For the seventh time in two months, the City Council on Tuesday put of public debate on an outrageous giveaway of $4.6 million in public money to developer Hal Katersky, best known for lawsuits, bankruptcies and profiteering from runaway film and TV production.
The deal on a property at 1601 N. Vine St. in Hollywood is so bad and has become so visible that the Council has put it off until Oct. 22. It should be killed outright as Jack Humphreville writes today at City Watch LA.
It’s just one of hundreds of dirty deals put together by the Community Redevelopment Agency that takes fortunes in tax dollars that could be used for libraries, parks, police officers, even to turn tenants into home owners, and gives them to wealthy and well-connected developers whose projects destroy neighborhoods and overwhelm the city’s aging infrastructure.
On the Council agenda for closed session on Wednesday is another CRA deal that is so dark and dishonest the Council had to break the law more than once to sneak its approval through — actions that will add to the cost to taxpayers and have led to a formal complaint being filed with District Attorney Steve Cooley.
The issue at hand is possible settlement of court costs and attorney fees for the South Central Farmers lawsuit over violations of the state’s open meeting law, the Brown Act, that occurred in originally approving a shopping center at Slauson and Central avenues in South LA.
Beyond that issue lies the tortured history of the project symptomatic of how the
Council and the CRA connive to enrich insiders and political supporters while abusing the power of eminent domain and fail to deliver on its promises to a community badly in need of a grocery story and other retail shops.
Slauson and Central is case study on why the CRA should be abolished and the billions of dollars in property tax revenue it has gotten restored to the city treasury where it can be used for core public services and specific programs that improve the quality of life for residents and a healthy climate for business.
In their request for a DA investigation (Slauson-Central Complaint.pdf), attorneys Robert Silverstein and Dan Wright lay out the convoluted story of Slauson and Central.
They tell how a local community group and a major out-of-state developer in collusion with the CRA put together this deal and despite all that’s wrong with it. The project got Council approval unanimously on Sept. 8 after two previous approvals had to be rescinded because they were done illegally.
Efforts to build the retail project date back to the mid 1990s when the City got a multi-million dollar federal Housing and Urban Development grant and
subsidized loans for the Slauson Central Project.
The city’s grant application said the
project developer would be a partnership between Pacific Retail Trust (later
merged with Regency Realty Inc.of Jacksonville, Fla.
and Concerned Citizens of South Central Los Angeles, a community group founded by Juanita
Tate and run by her daughter, Noreen McClendon, since her death.
There was just one small problem: The city didn’t own the land for the project, nor did the developer or Concerned Citizens..
The long-time owner of part of the property was Stanley Kramer who ran a scrap metal business there and tried unsuccessfully to work with Concerned Citizens so he turned to a local
shopping center developer who bought the adjacent corner property and nearly a decade ago put a project together a privately-financed deal without public subsidies.
Efforts to work with the CRA went nowhere so in June 2003, when the CRA project was still stalled, Kramer obtained Planning Department approval
of entitlements to build the shopping center.
With Councilwoman Jan Perry backing Regency/Concerned Citizens, the CRA Board authorized the filing of eminent domain lawsuits against the landowners
to seize the property and invalidate the city entitlements.
CRA won and seized the property but the Kramer team began digging into the public records reviewing public records and its 2008 lawsuit challenging the CRA’s environmental review is pending.
Kramer also sued over the
CRA’s refusal to produce public records, and obtained the right to use a forensic
computer expert to extract thousands of documents that had been withheld.
2008, the Council at Perry’s request approved doubling Regency’s authorized profit to
18 percent — a ridiculous profit margin given the public funding..
Still, nothing moved forward. The Brown Act lawsuit revealed the Council had violated
the law when it “pulled” special meeting agenda items into a regular meeting
without proper notice to the public. It also showed showed the City Cllerk was counting as “present for a
vote” any Councilmember in the back rooms — a practice that now been changed to require counting only members as present who are actually in the Council Chambers.
More importantly in terms of the future of this project was the Silverstein law firm’s discovery that in June 2003
Concerned Citizens, Infinity Redevelopment and a previously unknown non-profit, “Slauson Central Community Center,” formed a new partnership called Slauson Redevelopment LP.
Juanita Tate signed for Concerned Citizens and Curtis Fralin signed for Infinity. At the same time, Tate and
Fralin signed a “Purchase and Sale Agreement” promising to buy the Slauson
Central Retail Project within one year after the center was built but they did so as partners of
something else called “Slauson Central Partners LP.”.
The mystery of what was really going on was growing deeper with Slauson Redevelopment LP stating it intended to own and operate the shopping center, but other documents stating Slauson Central Partners LP was in fact the buyer. The lawyers found Slauson Central Partners LP was not registered with
the Secretary of State.
The discrepancy about who actually was the buyer of this project escaped the notice of CRA staff or was ignored and never was brought to the Council’s attention, leaving serious questions about whether any of the safeguards to protect the $7 million in HUD and CRA subsidies are enforceable.
Not to worry, the CRA says. “What
the community is going to get here is a wonderful reuse of an
industrial site,” said Jenny Scanlin, project manager for the Community
It’s almost funny to read that quote since this project has been in the works for 15 years and is still nowhere near to being built and the principal partner, the flimsy excuse used to justify the use of eminent domain, is Concerned Citizens which has been hit with a $5 million judgment by the city and is being sued by the state for breaching an agreement to build a soccer field and youth center at Slauson and Main.
An investigation by District Attorney Steve Cooley would go a long way to clearing up the mystery of this deal but the real problem is that it isn’t an isolated case, just an extreme one.
The CRA is as big a problem as the DWP. Both operate in the darkness and do their best to avoid public scrutiny.
They are now key instruments of First Deputy Mayor Austin Beutner’s “jobs creation” schemes to use the public money to subsidize more projects faster and with even less public scrutiny.
It will take dramatic changes at City Hall to bring out in the open what they are up and that’s not going to happen without a change in leadership.