Sacto's Ongoing Redevelopment Disaster

APRIL 19, 2011


Since its inception in 1953, the Sacramento Housing and Redevelopment  Agency has been driven by scandals, sweetheart deals for connected developers, cockeyed projects and ineptitude. In 1991, this reporter wrote the official history of the (SHRA) in a book titled, “Flood, Fire & Blight.”

The agency’s history since then has included such developer-concocted deals as:

* The proposed redevelopment of the Southern Pacific depot (a Tsakopolus-Angelides project)
* The fourth ( or is it fifth? — I forget, there have been so
many) redevelopment of the downtown mall.
* The failed Convergence Project.

* The new and aptly named “Green Line.”

Given all that, today the book might be re-titled, “Blood, Ire & Bloat.” Taxpayer blood is irate with supporting developers’ cash-bloated projects. In Sacramento, this blood-letting has been refined to a science

Redevelopment Failures

The city first redeveloped the K Street Mall in 1966 with a “pedestrian mall,” a series of crazily angled and pedestrian-unfriendly concrete structures supplied by local mega-developer Teichert Construction. Critics called the $8 million contraption of peaks and streams “the tank traps” — sort of like those the Germans erected on Normandy Beach in World War II to try to halt the Allied invasion and liberation of Europe.

It killed K Street, which was until then the commercial heart of downtown Sacramento. The mall lasted less than 20 years before the SHRA spent another $18 million on K Street trying to fix it. Ten years later, another $20 million of redevelopment revenue was spent on a new K Street Mall.

A few years later, the city shelled out another $25 million in developer kickbacks and light-rail relocation. “That whole project right from the beginning is a city-wide disgrace,” says Jim Walker, an agent with Cook Realty and a native of Sacramento. “They should  never have taken the cars off K Street. When they did, all the theaters closed, and then all the restaurants, then the department stores.”

End All Redevelopment?

Earlier this year, Gov. Jerry Brown announced his controversial plan to do away with all of California’s redevelopment agencies, allowing the state to recoup $1.7 billion in revenue set aside for the redevelopment agencies who control earmarked revenue through increased property values. The $1.7 billion would then divert to the state’s $26 billion under-funded general fund.

The Brown plan was delivered after a state audit of 28 redevelopment agencies in California conducted by State Controller John Chiang. The audit found a number of the redevelopment agencies guilty of abuse and mismanagement.

Among those agencies studied by the Chiang audit and found guilty was the Sacramento Housing & Redevelopment Agency. Lashelle Dozier, the SHRA’s executive director, fired back at the report almost as soon as Brown announced his plan.

“During these challenging economic times, Sacramento needs to have the tool of redevelopment always within reach to keep its economic engine from stalling out,” said Dozier, whose agency has 291 employees, a budget of $261 million and controls 3,144 units of public housing.

Those opposed to the redevelopment agency closures are agency chiefs like Sacramento’s Dozier and San Francisco’s interim Mayor Ed Lee. Some critics of the plan also say that Brown’s policy change on redevelopment reeks of hypocrisy.

As Chase Davis reported in a story published on January 21 in California Watch:

Jerry Brown’s controversial proposal to do away with local redevelopment agencies is rich with  small ironies. First, there’s the governor’s new loft: an award-winning example of infill development in downtown Sacramento that was funded in part by the same type of redevelopment agency Brown wants to eliminate. After meeting with Brown earlier this week to discuss the proposed cuts, Yuba City Mayor John Dukes wasn’t shy about telling the Sacramento Bee that he found the choice of digs to be “a little hypocritical.”

Despite Dukes’ and Dozier’s protests, supporters of the redevelopment agency closures say that Sacramento’s redevelopment agency is a prime case of redevelopmental disability.

The SHRA can claim with some pride that they were the first such agency in the United States to issue redevelopment bonds; and that the first project called a “redevelopment project” in Sacramento was a ringing success (the 1929 construction of the Arts & Craft style buildings that grace the west side of Capitol Park). But it has not been a cheerful history ever since.

Deals and Scams

Sweetheart deals and scams have been the bywords of the SHRA for the past four decades. One of its former executive directors, Harry Zollinger, was fired in 1971 for misappropriating redevelopment funds for his own use. Two executive directors later, the SHRA’s unused housing allocations had risen to $17 million in 1980.

According to Lloyd Connelly, a former Sacramento City Council member who now serves as a Superior Court Judge, “There was a lot of dissatisfaction with SHRA during that time because [low-cost] housing just wasn’t getting done.”

One redevelopment proposal put forward in 2010 was a fairytale fantasy called “The Convergence Plan.” This was the loopy idea to give away Cal Expo, the state fair site, to developers like Gerry Kamilos, David Taylor and Angelo Tsakopolous. The state would cede Cal Expo for a new state fair site at the current Kings basketball team site. The Kings would then move into a new $350 million downtown stadium adjacent to the Southern-Pacific depot that would be largely funded by SHRA redevelopment bonds.

Although the land swap plan was backed by the National Basketball Association and Sacramento Mayor (and former NBA star) Kevin Johnson, the Convergence Plan failed to convince locals.

“That whole thing was a joke,” says Pat Melarkey, the former Sacramento County Supervisor, shaking his head. “First off, it was a giveaway of the state fair to the developers. Second is the fact that the state fair couldn’t have been squeezed into the Kings site. Third is the fact that Arco Arena is only 25 years old. And the fourth but most important point was the cost. Why should the city put up $350 million for a new downtown stadium during such a downtown as Sacramento has had? And what guarantee would we have that the Kings would stay here?”

Melarkey’s suspicions were shared by many Sacramento residents. By the end of 2010, the Convergence Plan was dead. Now the Maloof family is in the process of selling the Kings, who may move to Anaheim.

Green Line Pork

The newest redevelopment pork fest is the so-called “Green Line” light-rail extension. It will run north from downtown Sacramento on 7th Street to Township 6. This project, which will run 1.7 miles and serve 2,350 new residents, is projected to cost $1.7 billion, more when you add in the trains.

As of December 2010, the SHRA had assembled $53 million of the total cost. This is another project that would require redevelopment bonds. The corporations in line for the new rail line project are Teichert Construction, URS and Parsons-Brinckerhoff, Quade & Douglas.

URS is also involved in the California High-Speed Rail and the peripheral canal. So is Parsons-Brinckerhoff, the corporation famous for putting the $14 billion “Big Dig” on Boston.

Critics of the Green Line include Sacramento rail advocate Richard Tolmach, of TRAC (the Train Riders Association of California).  “When you add in the projected cost of the train [about $1 billion, Tolmach estimates], it rounds up to a cost of about $1 million per resident. This is a total flim-flam  It shows that the SHRA’s projects are mostly focused on manipulating land values. They don’t serve what they are promised to serve and they don’t do anything for the taxpayers who finance them.”

The much-redeveloped K Street Mall is still a crime-ridden and unpopulated dead zone of lost souls. Which it has been for the past 40 years — even though the Sacramento Bee frequently calls it a “renaissance.” Wrong, It’s a cash cow hole in the ground for developers bellying up to the trough: If they don’t get K Street right, they get another chance to fix it again.

Maybe Jerry Brown can find another 14 agencies with $1.7 billion to siphon off for the general fund and thereby avoid the unhappy task of downsizing the state work force from its current population of 350,000 and $30 billion payroll, or addressing ballooning state worker pensions. That’s unlikely, given that the union-organized state workers are largely his base.

Gov. Brown and SHRA Executive Director Dozier were sent a list of 11 questions by this reporter asking for comment about the downtown mall, the cynical snatch and grab of redevelopment funds for the state and the sweetheart deals involving major developers. Neither of them, nor their press secretaries, bothered to respond.

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  1. Dennis Owens
    Dennis Owens 19 April, 2011, 15:52

    Richard Trainor, keep up the Great Work! Your diligence provides for a greatly needed service – exposing the corruption, the crony capitalism, special interests and special deal-making that is so destructive to our State. Than You.

    Reply this comment
  2. Sarah Foster
    Sarah Foster 27 April, 2011, 23:13

    Kudos to Richard Trainor for his great expose of the SHRA. Trainor covers a lot of ground — over 50 years of scheming, scamming and incompetence on the part of crony developers, city hall insiders, city planners and other usual suspects.

    He’s answered/discussed several questions I’ve wondered about — like whatever happened to the Convergence Plan? And how/why did K Street morph from a bustling business district to “a crime-ridden and unpopulated dead zone of lost souls” in a few years — then stay that way for several decades? And why is the SHRA spending $1.7 BILLION to build a short (1.7 miles) light-rail project (Green Line) that will serve just 2,350 new residents? And that $1.7 billion is only for construction. The trains will add to the costs.

    I second the remarks of the earlier commenter — “Keep up the Great Work! Your diligence provides a greatly needed service…..” Looking forward to more of the same.

    Reply this comment

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