This past Saturday there was a conference in Ontario of people interested in limiting the excesses that happen under Redevelopment law. A growing number of taxpayers feel a law that was designed to eliminate blight and stimulate economic growth in depressed areas has become a giveaway to rich developers and a subsidy for new businesses over established ones. There were over 80 people there including State Senators Tim Leslie and Dick Mountjoy and Assemblymen Tom McClintock and Bernie Richter. There were numerous councilpersons, many of whom told horror stories of abuse of Redevelopment law in their towns.
Redevelopment cannot stand the light of day because of the shadowy world it operates in. It is a world of "back room deals" where lucrative contracts are made that favor friends and secret partners. It is a world of finders fees, commissions, kickbacks, campaign contributions and holiday gifts. Any deal done in secret behind closed doors by public officials has every opportunity for mischief, for graft.
The root of the problem is the ability of city councils acting as Redevelopment Agency commissioners to issue bonds without the vote of the residents. All other bonds involving public funds require a vote of the people-all of them: school, public improvements, prisons, parks, you name it, everything except Redevelopment bonds. Every city council acting as the Redevelopment Agency can, without your vote, create debt whose payback is based on tax increment and sales tax projection that will probably not be enough in our lifetime, if ever.
The bond debt created to start a project is supposed to be paid back from new dollars generated by the new property tax increment, when in fact those dollars equal to the amount of new sales tax generated are usually promised to the developer as an incentive to build the project. These future dollars will not be available to pay back or service the bonds and therefore another Redevelopment project will have to be done in order to get new money to pay off these old bonds. But more new money will also have to be given to the developer of that new project as his incentive to come "revitalize" the town.
This is why Redevelopment Agencies come up short of funds and the cry is raised for yet another project to get more property tax increment. It is the classic Ponzi scheme; getting new money to pay off old. Long Beach, Hawthorne, Fontana and many others are textbook cases. This is one of the things wrong with Redevelopment and some day it will collapse because it is financially unsound.