In 2011, while in the Legislature, I worked with Gov. Jerry Brown to abolish California’s redevelopment agencies (RDAs). Brown and I both had seen redevelopment from many angles. He as a governor, mayor of Oakland and L.A. Community College trustee and I as a mayor of Fullerton, Orange County supervisor and state assemblyman.
The RDAs were bleeding the state during a budget crisis similar to today’s.
Created to address urban decay, redevelopment agencies became cash cows for developers, big box retailers and car dealers shaking cities down for public money. Through eminent domain, homes and small businesses were seized and demolished, the land given to favored developers. Rather than reviving depressed urban areas, RDAs assembled raw land for malls and auto centers.
By the early 2000s, there were over 300 redevelopment agencies operating in California, administered by city governments. They were meant to last 45 years, then shut down after the blight was cured, but they kept extending and expanding. The “blight fight” scam would never end.
Redevelopment abuses created a bipartisan coalition of teacher unions, property rights defenders and neighborhood preservationists. In 2006, I moderated a conference including Congressmembers Tom McClintock and Maxine Waters, one libertarian-conservative, the other progressive-liberal, but both united in opposition to eminent domain abuse. McClintock is strong on property rights and Waters knew eminent domain targeted poor minority communities for displacement.
By 2010, the public financial burden was unsustainable. Over 12% of property taxes statewide were being diverted to redevelopment coffers. In 2011, under pressure from Gov. Brown, the Legislature in which I then served abolished redevelopment agencies, ordered cities to pay off their debts, sell surplus property and restore lost property taxes to school districts and counties.
Since then, legislative attempts have been made to revive watered-down forms of redevelopment: Cities may now create an EIFD (Enhanced Infrastructure Finance District) or a CRIA (Community Revitalization and Investment Authority), but neither can divert school funding nor use eminent domain.
Assembly Bill 1476 by David Alvarez, D-Chula Vista, would restore all the previous powers of redevelopment, including past abuses such as:
Blight makes right: Redevelopment was aimed at curing “urban blight” but definitions of blight were so vague that anything qualified. Everything from farmland to historic downtowns were deemed “blighted” for redevelopment purposes. By 2010, fully 30% of all urban land in California had been declared blighted, including in affluent cities like Yorba Linda, Arcadia and Claremont.
Fiscal waste: In redevelopment areas, all increases in property tax revenue are taken by the agency. Since schools rely heavily on local property taxes, they were the biggest losers in RDA money grabs. County governments and special districts lost, too. To backfill revenue lost to school districts, the state took money from cities to make up for revenue cities (through their RDAs) took from schools. This jury-rigged fiscal merry-go-round proved unsustainable by the early 2000s, when redevelopment was abolished completely and full funding restored to education.
Sales tax shell game: Cities used redevelopment to heavily subsidize new retail development, trying to capture more sales tax (1% of gross sales) for their general fund. Big box retailers, movie multiplexes, auto centers and malls were built with land write-downs, cash grants and tax rebates. With the over-building of retail and rising internet sales, California’s landscape became littered with empty auto dealers, dying malls, struggling strip centers and empty theaters. Fiscalization of land use led to a surplus of empty stores and a shortage of housing.
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Eminent domain for private gain: Originally intended for public uses (roads, parks, schools) RDAs used eminent domain to seize property to transfer it to another private owner. Anaheim used eminent domain to demolish its entire historic downtown in the 1980s.
Corporate welfare: Billions in property taxes were spent chasing giant retailers, even as overall on-site sales declined. Heavily subsidized Costcos and Walmarts proliferated at the expense of traditional supermarkets.
Debt: RDA bonded indebtedness topped $81 billion, with over 20% of revenues being spent on interest. Redevelopment was a cash cow for Wall Street bond brokers, who are now pushing to bring it back.
Californians concerned with funding schools, fair play, free enterprise and fiscal responsibility should oppose AB 1476 and any other attempts to revive redevelopment agencies.
Chris Norby is a former Orange County lawmaker. He is the author of the ““Redevelopment: The Unknown Government,” published and updated between 1995 and 2011.