What I was trying to show was how Redevelopment under the Health and Safety Code can, and usually does, take from general services and produce a negative cash flow for a city which then takes years to get back as tax increment. In the Penske deal it was particularly unjustified because the deal was already made with or without any city involvement. Toyota Motor Credit is obviously quite capable and was motivated to make a deal.
Redevelopment under the Health and Safety Code is like a cancer that now infects most cities in California. It is a corrupt process that compromises developers and city officials of all stripe. It is a process that takes from the poor and gives to the rich. Started as a way of removing blight from urban areas, it has become a way of life for one town to steal business from an adjoining town or otherwise attract big sales tax generators to its city. Most likely candidates are car agencies and "big box" users such as Wal-Mart and, in this part of the state, Price Club. These types of projects are to generate sales tax revenue.
The usual incentive is a "write-down" on the land where the city sells the land to the developer for less than its purchase value. In the past, typically the price to the developer was half the value of the land. Now with fewer development candidates a full "write-down" of the land to $1 is common. The payback period before the city recovers its investment may run 12 to 18 years. And with the current depreciation in property values the payback period for some projects on the books will be even longer, maybe never.
Of particular concern are those projects which don’t seem to make any sense or the giveaway is so huge you have to ask why. The Redevelopment industry is a cottage industry, heavily lobbied for by the California Redevelopment Association. I am a member and have gone to their meetings for years to know what they teach their members. One soon learns that these professionals "climb the ladder" to increasingly larger cities after three to five years at each level. When there are not enough "good" projects to go around, they will have what is called in the trade "a resume project." In a recent solicitation for a redevelopment position in the San Diego area, the announcement stated that strong consideration will be given for the number and value of projects completed. It should be clear what the criteria is for advancement.
Therefore, it was with certain misgivings that I read an article in a May 1993 issue of California Business which had a listing of the 40 mid-size cities that compete most vigorously for business. Our City of Downey ranked #20. A reading of the other cities showed a pattern of fast tracking the permit process, waiving or abating some of the fees, some land "writedown" and rarely sales tax return. I think you will find the listing for the City of Downey revealing on how our city is being marketed. "Come to Downey and get money."