Redevelopment barons plot comeback

JAN. 9, 2012

I’m still giddy after the California Supreme Court ruled last month that the state had every right to shut down those noxious enemies of property rights and fiscal responsibility — redevelopment agencies. Better yet, the state’s high court ruled that another law that allowed those agencies to come back into existence was unconstitutional.

As of February, anyway, redevelopment is dead in California, the victim of an absurdly arrogant legal and political strategy pursued by redevelopment’s chief defenders. This is wonderful news, made even better by the teeth-gnashing of public officials who have routinely abused their powers under redevelopment law. Cry me a river.

But before I gloat too much, we need to remember that this victory already resembles one of those cheap horror movies where the Evil Thing has been vanquished, and all appears well, then its hand pokes out from the grave just as the credits begin.

No one gives up riches and power without a fight, so redevelopment lobbyists already are crafting new legislation to replace the dead agencies with new, revised versions. (Meanwhile, successor agencies will pay off old debt, and old projects will go on to completion. Many of those projects and property transfers slapped together after the law killing redevelopment agencies, or RDAs, was passed will be audited by the state controller, stopped or tied up in litigation. Many RDA officials, thankfully, will be out of work.) The fight goes on but I never would have expected such progress.

One of my earliest memories as a newly hired editorialist at the Register in the late 1990s was meeting with local property-rights activists in a parking lot outside a subsidized shopping mall project and looking at their charts explaining why a process called “redevelopment” was such a problem. As we gawked at the fruits of redevelopment’s corporate welfare, they explained how these urban-renewal agencies float debt without accountability and routinely misuse eminent domain, government’s power to seize private property for supposedly public purposes.

Days of Despair

As I plunged deeply into the issue, I never forgot that sense of near-hopelessness I felt in that parking lot. I never forgot the despair I saw on the faces of homeowners in Garden Grove as they begged the city to scotch a quietly hatched plan that would have driven them out of their middle-class neighborhood so that the city could market the land to a theme-park developer that was yet to be determined.

Over the years, I’ve interviewed victims of eminent domain, many of them immigrant small-business owners who couldn’t believe what was happening to them in America. They were bullied, put out of business and forced to spend years battling City Hall rather than building a better life.

The general public learned of the injustices after the U.S. Supreme Court’s 2005 decision in Kelo vs. City of New London, in Connecticut, which upheld the “right” of governments to use eminent domain for redevelopment-type economic projects. The grand revitalization project that destroyed homeowner Susette Kelo’s Connecticut neighborhood was abandoned, and the site remains a dumping ground. It serves as a reminder that officials in the United States can’t plan an economy any better than their equivalents in the old Soviet empire. Free markets work better than bureaucratic central planning.

I’ve seen how the redevelopment process has distorted economic markets and made it more difficult for people without political connections to build their businesses and their dreams. Redevelopment embodies crony capitalism, but there’s so much money in it, with so many consultants and politicians who benefit from it, that I never dreamed of the day when it could actually go away. Who would have thought that redevelopment agencies would be the ones on the outside looking in, scheming for new ways to regain some power and privilege?

Redevelopment officials are so used to getting their way with average citizens that they figured it would be no problem giving state elected officials the back of their hand. The seeds of their demise were sown after former Gov. Arnold Schwarzenegger attempted to divert some of their funds to fill part the perpetual state budget hole.

Diversion Scheme

Redevelopment — which morphed decades ago from a mechanism to fight urban blight into a scheme to divert county and state taxes to cities — is a creation of the state, so the governor argued that the state had the right to take some money. The League of California Cities and the California Redevelopment Association struck back with Proposition 22, approved by voters in November 2010, which forbade state diversions of redevelopment funds. It was sold to the public as a means to stop Sacramento politicians’ raids on local road funds.

The blight barons were gloating after their big victory, but then Gov. Jerry Brown came up with a work-around. He signed a law that shut down RDAs. After all, Prop. 22 can’t stop a raid on funds of agencies that no longer exist. And then he also signed a law that allowed the agencies to come back to power after paying funds to the state.

The redevelopment community challenged both laws and was pleased when the high court agreed to review them. But redevelopment advocates were stunned by the unanimous ruling that found that the Legislature was perfectly within its authority to abolish agencies that it had created. The justices also ruled 6-1 that agencies cannot buy their way back into existence because that violates Prop. 22, the very initiative the RDAs had crafted. How sweet is that reasoning?

I celebrated one recent night at philanthropist Moe Mohanna’s downtown Sacramento Oddfellows building. Many in this odd group of activists on the left and right, including Mohanna, had been abused by redevelopment agencies. We ate Persian food and savored the rare victory for the good guys. But we realized that redevelopment is, as the Monty Python troupe once said, “not quite dead.”

Let’s hope coalitions emerge this year to keep this Evil Thing in its grave.

— Steven Greenhut

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  1. Reality Check
    Reality Check 9 January, 2012, 09:13

    The only reason the redevelopment agencies were defeated is because the public sector unions want this money to help maintain their over-market pay and benefits. If not only redevelopment but also public employee compensation were brought down to earth, we would not have budget deficits.

    Reply this comment
  2. queeg
    queeg 10 January, 2012, 08:45

    Unions are in a death spiral due to poor allocation of assets to protect sloths doing unneeded public sector work….

    You are already see unions eating their own..security vs education vs welfare vs political class…

    Rejoice…real cuts are your friend!!!

    Reply this comment
  3. Brad
    Brad 10 January, 2012, 11:50

    Your story “Redevelopment barons plot comeback” was simply ridicules. It was so full of blatant untruths and deceiving only-half-of-the-story references that it appeared to be nothing more than propaganda.

    I’ve been personally involved in redevelopment activities for over the past twenty plus years, (fortunately, not within the State of California). Consequently, I can speak from first-hand experience that the misinformation your story depics is in no way, shape or form representative of factual redevelopment efforts within the United States. And frankly, your extremely insensitive, highly inappropriate comment regarding “Many RDA officials, thankfully, will be out of work” leaves readers questioning what entity, or perhaps more accurately, what political group is behind such bull.

    I unfortunately do not have the time to address all of the “untruths” within your article. However, for the sake of clarity and truthfulness (primarily truthfulness), I feel compelled to clarify some of your bias and unwarranted comments. (In addition to the previously-specified unwarranted comments).

    Your reference to redevelopment officials as “noxious enemies of property rights and fiscal responsibility,” and your misleading statement that “Redevelopment Officials are so used to getting their way with average citizens,” as if “Redevelopment Officials” are some form of mind-controlling entity that propagates some anti-American agenda. While in fact, (and in truth) those very same “Redevelopment Officials” that you refer to are the same individuals that have been legally and duly elected by, and sworn to serve in the best interests of, those very same “average citizens” that you claim are so being taken advantage of.

    And as you are clearly unaware, in virtually every city in the United States, those same “Redevelopment Officials” that you vaguely refer to are the very same people that were elected by, as you term it, “the average citizen” to serve as their city councilman/legal government representative. In addition, the Mayor of virtually every U. S. city also serves as the Executive Director of their respective Redevelopment Agency.

    Consequently, when you refer to those evil “Redevelopment Officials” who supposedly represent such injustice, you are directly referring to your very own local government representative (your City Councilperson, and/or your Mayor), the individuals that you voted for to represent you in matters pertaining to your local government, as “an noxious enemies of property rights and fiscal responsibility!”

    I always thought that the City Council and Mayor were elected to do what was deemed best for their respective cities?

    Reply this comment
  4. keep da peace
    keep da peace 13 January, 2012, 17:33

    Gosh, Brad, I don’t know what fantasyland your RDAs are in but here in the Golden State many of the RDAs are run by the same corrupt bunch that run the city councils and boards of supervisors. So, there is no separate “election” of these thieves in most cases. RDAs are cash cows full of consultant fees and corruption at the lowest levels. Affordable housing in this state, one of the reasons for RDAs to exist, are all but non-existent in most cases. Eliminating blight? That’s a laugh unless you count the folks run off their land through the eminent domain process. RDAs are a government sanctioned robber barons of modern day. And the sooner we can dissolve them, the better.

    Oh, and it really pains me to say that I actually agree with Greenhut on this issue but, for oncevhe got it right without having to pull out the union card.

    Reply this comment

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