One way the inequities show up is the application of Redevelopment law under the Health and Safety Code. With the widespread use of Redevelopment by cities to entice building and new businesses to a project area, the land owner outside the project area is in competition with the Agency for new tenants. He can not give away land or buildings as a city can. And he can give only a little free rent because lenders must see a projected income stream to justify the construction loan. So he is in a poor competitive position. This is a classic struggle of a David against Goliath - the private property owner against the City Redevelopment Agency. In these cases, the City usually wins.
But these battles are not limited to individuals. Wih the saturation of malls now, cities are fighting other cities over tenants, auto malls and even development of whole malls. Such is the case between Long Beach and Lakewood. There are many ramifications to this battle.
The essentials are that Lakewood is trying to protect the sales tax base of its Lakewood Mall while Long Beach is desperately trying to find new sales tax dollars and property tax increment dollars to bail out its existing downtown Redevelopment project, which by all reports is in deep, deep trouble. Long Beach is having to borrow money to make the payments on their redevelopment bonds. Their ocean front property has been devalued, reducing the amount of tax increment money collected. Rent income is down (one recent new tenant to a high-rise got 3 years rent free), but the bond interest payments still have to be paid. There is serious speculation in the financial community that Long Beach will need a bailout, as in restructuring of debt, from default. They would be the second city to need rescue from Redevelopment excesses. This is why a new mall is so important to them and to their economic survival.
The site in question is the now closed and surplus Navy hospital on Carson St. in the northeast corner of Long Beach. There is a certain parallel between these cities competing and the private land owner competing with a city’s Redevelopment Agency.
The fundamental problem with Redevelopment is that it is not an economically sound process. What happens is that public money is diverted from the treasury (city’s general fund) and channeled through a second agency (Redevelopment) and given to private interests (the developer) to the detriment of public services and especially the schools. The schools come into play because their share of the new tax dollars has also been diverted back to the city’s Redevelopment Agency leaving the schools at the mercy of the state.
Take, for instance, the City of Cerritos. They have a big new Performing Arts Center. If every seat for every performance were sold at full price, the annual subsidy would be about 2 million dollars. As obviously not every seat is sold, the reported subsidy is just a little over 3 million dollars a year. While the Redevelopment Agency in Cerritos has plenty of money from the old Los Cerritos Mall and from the new Wal-Mart anchored mall, the schools are taking a beating. The ABC School District is very short of money and the state backfill program is not making up the difference. So the schools are not being maintained, there is a shortage of money to pay teachers, and the children are barely being educated, but they have a beautiful place to go at night time—if they could afford the prices. That has to say something about values and priorities.
This siphoning away of money from the schools has to be the biggest crime of Redevelopment. Paramount’s financially stripped schools are a bitter testament to Paramount’s Redevelopment projects. Paramount all the while is counting on their Wal-Mart to bail out the bonds on their Redevelopment Agency’s various empty store buildings.
And so the "rob Peter to pay Paul" game goes on. Redevelopment has a pretty facade but it is rotten to the core.