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Park Fifth Public Benefits Approved, but TFAR Process Raises Questions

By Eric Richardson
Published: Thursday, April 24, 2008, at 01:52PM

Friday morning the board of the Community Redevelopment Agency approved the Public Benefits package for the Park Fifth project, a $17.7 million package that includes money for Pershing Square redevelopment, streetscape improvements, and $2.5 million each to the Downtown Women's Center and Skid Row Housing Trust.

While the room on Friday was filled with speakers in support of the project, several questions were raised as to how the recipients of this funding were chosen.

The Park Fifth project is able to be built to the density that it is because of the TFAR (Transfer of Floor Area Ratio) ordinance, which the city passed last year. That ordinance allows unused permitted floor area for under-built city sites to be sold to developers who wish to build larger projects than the zoning of their site would normally allow.

There are two payments associated with the TFAR process: the Public Benefit Payment and the TFAR Transfer Payment. The TFAR ordinance sets formulas for how much each is to be.

The money that the city collects from TFAR sales is intended to be used "for public purposes." Specifically, the ordinance defines those as:

... providing for affordable housing, public open space, historic preservation, recreational, cultural, community and public facilities, job training and outreach programs, affordable child care, streetscape improvements, public arts programs, homeless services programs, or public transportation improvements.

While some funds are allowed to be directed to specific uses, an important function of the ordinance is to fund the "Public Benefit Payment Trust Fund." The ordinance specifies that at least 50% of the Public Benefit Payment must go into the Fund unless Council gives a special exemption, and that 100% of the Transfer Payment goes into the Trust Fund.

And yet both of the two projects to use the new TFAR ordinance -- Park Fifth and 1133 S. Hope -- have come through the process with all of their funds specifically targeted and with no money getting added to the Trust Fund.

The CRA report for 1133 S. Hope says:

Under the TFAR Ordinance, the Developer has the option of paying the entire Public Benefit Payment into the Public Benefit Payment Trust Fund or paying half into the Fund and expending the other half on Community Benefits... Here the Developer is making a cash contribution of $992,298 to Skid Row Housing Trust for the provision of housing for homeless individuals.

... Under the TFAR Ordinance, the TFAR Transfer Payment is paid in cash by Developer to the Public Benefit Trust Fund. In this case, however, the Developer shall make a cash contribution of $250,005 for the TFAR Transfer Payment to Skid Row Housing Trust for the provision of housing for homeless individuals.

To restate, "the law says this, but in this case we're doing something else."

The Park Fifth project's benefits package includes a $14,210,000 Public Benefit Payment and a $3.5 million Transfer Payment. Of the Public Benefit Payment, $2.5 million is direct to the Downtown Women's Center, $2.5 million is direct to Skid Row Housing Trust, and $5.4 million goes directly to Recreation and Parks for Pershing Square improvements. No money goes into the trust fund.

The $3.7 million Transfer Payment is required to go into the Trust Fund, and does so, but comes with immediate plans for its use.

The Developer will make a $3,464,440 Transfer Payment to the Public Benefit Trust Fund and requests that the Public Benefits Trust Fund Committee designate the funds for the improvement of Pershing Square Park.

While certainly it is appropriate for developers to have a say in how their money is used -- and everyone Downtown is in favor of park redevelopment -- the process as it is currently being deployed is dangerous. A significant portion of TFAR funds need to go into the Trust Fund, and they need to be available for an open and fair application process. The best ideas in public benefit will come from competition and not from political designation.

The Park Fifth benefits package must still go through Council approval.


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