Council reallocates earthquake‑recovery loan funds after debate over redevelopment and eminent‑domain risks

The Los Angeles City Council voted to reallocate federal commercial/industrial earthquake‑recovery loan funds after staff said the original recipient had not met deadlines and the money would otherwise revert to the federal government.

John McCoy of the Community Redevelopment Agency (CRA) told the council the loan commitment to Irwin and Lula Washington was being revoked because plans, permits and a bonded contractor were not secured in time and the funds had to be spent by June 30. CRA proposed reallocating the funds to other qualifying projects so the federal dollars would remain in the city rather than return to federal coffers.

Councilmember Walters and others pushed staff for clarity on whether the reallocation was related to a separate proposed large commercial redevelopment (referred to in the hearing as the "big box" project) on property fronting Adams and abutting the freeway. Residents and some council members expressed alarm at earlier committee materials stating that the project could affect 77 homes and 20 businesses and asked whether eminent‑domain action was contemplated and when residents would be notified. CRA staff and the project manager said the loan reallocation for the earthquake‑recovery program is separate from the redevelopment project; they said eminent‑domain proceedings (if any) would be taken by the redevelopment agency board later in the process and that the disposition agreement would return to council before any such acquisition steps.

Council members asked staff to return with a status report on the redevelopment negotiations and to provide a timeline and clarification about properties potentially at risk. Some council members said they supported reallocating funds now to assist other earthquake‑damaged small businesses rather than losing the federal money; others sought stronger assurances and faster reporting from CRA about the separate redevelopment negotiations. The council approved the reallocation after multiple procedural votes and directed CRA to report back.