New law clears way for redevelopment’s return

After-RedevelopmentFive years ago, when state courts upheld Gov. Jerry Brown’s and the Legislature’s move to shut down redevelopment in California and seize $1.7 billion in redevelopment funds from local agencies around the state, Brown’s crusade won cheers from many of the state’s pundit class. They saw the diversion of some property tax revenues to well-connected developers in the name of improving “blighted” areas as akin to crony capitalism, and many also didn’t like the frequent use of eminent domain to seize land for redevelopment projects.

But Brown never really made clear if he shared this critique — or if he just thought that during a budget crisis, the $1.7 billion he could take could be put to better use. He had used redevelopment while mayor of Oakland, but he also had to be aware of redevelopment abuses involving dubious blight declarations and the diversion of 12 percent of all state property taxes to various redevelopment projects. 

Now it is clear that Brown was driven by fiscal pressures. Last year, he signed Assembly Bill 2, which allows local governments to expand and better fund entities called a “Community Revitalization and Investment Authorities.” Last week, he signed AB2492, a companion bill that defines circumstances in which local taxes can be diverted for which projects — and it appears to encourage the same sort of mischievous declarations of blight that drove critics mad in redevelopment’s previous California incarnation. Both were authored by Assemblyman Luis A. Alejo, D-Salinas.

Successful businesses could be declared blighted

Under the latter measure, blight can be declared — and land seized for economic development purposes — if median income in a defined area is lower than 80 percent of the median income either “statewide, countywide or citywide.” Critics such as Marko Mlikotin of the California Alliance to Protect Private Property Rights say this would give developers and their political allies a tool to declare many thriving businesses, churches or public offices as blighted so their land could be conveyed to the developers for projects that are pitched as helping the local economy. Such diversions were allowed by the U.S. Supreme Court in 2005 on a 5-4 vote in the Kelo v. New London case.

Chris Norby, a former state assemblyman, Orange County supervisor and Fullerton mayor, chronicled the misuses of redevelopment in California in his 44-page 2007 analysis, “Redevelopment: The Unknown Government.” Here’s a short excerpt:

Redevelopment subsidies are not distributed evenly. Major developers, NFL team owners, giant discount stores, hotels and auto dealers receive most of the money. Small business owners now must face giant new competitors funded by their own taxes. …

Costco [received] over $30 million in subsidies in Orange County alone, extrapolated to $300 million statewide. Wal-Mart has gotten over $1 billion in public handout nationwide, with an estimated $100 million in California. Pro sports also profit from lavish subsidies. The Raiders got $7 million from Irwindale just for opening negotiations on a new stadium site (never built). In 1995, the Raiders returned to Oakland, lured by $94 million in public subsidies. The Chargers have gotten $134 million in seat guarantee pay offs courtesy of San Diego taxpayers.

While redevelopment apologists claim to be “rebuilding” our cities, barely 19 percent went for actual real estate development, and another 5 percent for land acquisition, much of it still vacant.

Significantly, $580 million — 11 percent — was spent on administration, most of it for redevelopment staff salaries. This provides a lucrative bureaucratic base that redevelopment staffers seek to preserve and expand.

Poor families evicted at developers’ behest

Norby’s research showed that many cities targeted areas with inexpensive housing for redevelopment, forcing evictions and reducing housing stock.

When Anaheim “improved” its working class Jeffrey-Lynne neighborhood, it forced existing apartment owners to sell to Southern California Housing Corp. Half of the units were demolished, over 400 tenants evicted and those that remained saw their rents doubled. Public subsidy: $54 million.

The Brea Redevelopment Agency demolished its entire downtown residential area, using eminent domain to force out hundreds of lower-income residents. Much of its housing money has since been spent on mixed-use projects that are really more commercial than residential. The agency gave $649,000 in housing funds to a largely retail development that will include only eight loft apartments.

Some of Norby’s criticisms were confirmed by a 2011 Legislative Analyst’s Office report.

Defenders of redevelopment counter that bad projects shouldn’t be held against good projects.

The redevelopment of San Diego’s Gaslamp area downtown is often held up as the crown jewel of California redevelopment. In the 1970s, the area was crime-ridden and seedy. Now it is a haven for towering hotels, trendy restaurants and bars, and the Petco Park baseball stadium.

Many cities which rely heavily on sales taxes for revenues also tout their use of redevelopment to open up “Mile of Cars”-style areas full of lucrative vehicle dealerships.

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  1. Standing Fast
    Standing Fast 4 October, 2016, 10:26

    So glad you wrote about this, Chris!

    I spent twenty-five years fighting redevelopment, working towards a goal of total abolition nationwide.

    Not many people understand that in order to put this egregious practice (public money and eminent domain for private use) out of its misery, the entire body of federal, state and local legislation and court rulings called “Redevelopment Law” will need to be repealed.

    These laws suspend the rights of some citizens for the benefit of others on the pretext of eliminating “blight”, which is blatantly described therein as property that public officials determine isn’t generating as much tax revenue as they think it should. I am not making this up.

    Blight is defined as physical, social and economic decay, a threat to the health sand safety of the American people so dire it justifies suspending people’s rights and Liberty to eliminate. In this equation, the American people are not considered to be our nation’s greatest asset, but its greatest liability.

    Redevelopment as it is practiced today (it is not an American tradition, despite what its proponents claim) began when Congress passed the Housing Act of 1949 which transferred a hated federal program to the States. California’s Community Redevelopment Law [Health & Safety Code Sec. 33000 et seq.] was adopted by the Legislature in 1952 and voters approved a Constitutional Amendment [Article XVI, Sec. 16] allowing local governments to use tax increment financing to pay for redevelopment projects the following year. Since then, voters have approved other constitutional amendments, like Prop. 22, that extend these powers.

    In 2011 when Brown signed the bill to shut down California’s 400-odd Community Redevelopment Agencies, they did not repeal any of these laws. The project areas were not shut down, though, and they are still receiving property tax increment revenue to pay off what is left of redevelopment’s monumental debt. Although the anti-redevelopment movement is bi-partisan, in 2011 Republicans (except for Chris Norby) opposed shutting down the CRAs, maintaining the odd position that public debt and eminent domain abuse are good for the economy.

    It is my opinion that fighting this outrage one project at a time, one city at a time, or one state at a time takes as much energy as working toward a nationwide movement for a Constitutional Amendment banning the use of public money and eminent domain for private development.

    My hope is that everyone who steps up to the plate to stop their local redevelopment agency (or, as they will now be called in California, “Revitalization Authority”) from bulldozing people’s rights away will use every battle to argue for nationwide abolition.

    This is how America’s 19th-century abolitionists eventually succeeded in putting a stop to slavery.

    It can be done.

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Chris Reed

Chris Reed

Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.

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