Redevelopment barons plot comeback

by Steven Greenhut | January 9, 2012 7:38 am

[1]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 inĀ 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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