Review of Citizens Conference
in Los Angeles on Redevelopment Abuse

M.O.R.R. Director Chris Norby, a four term Fullerton city councilman, explained why he became involved with fighting redevelopment abuses. "Shortly after I was elected to the council the Price club (now Costco) told the city council that we will move across the street to Anaheim, they are offering us free land and sales tax rebates. So the Fullerton RDA gave the Price Club a deal to remain in Fullerton. The prospering Dodge dealership came to the RDA and said we want to expand, we want you to give back some of our sales tax or we are moving to Buena Park. Fullerton lost 3 dealerships to Buena Park , Buena Park lost dealerships to La Mirada, La Mirada lost dealerships to Cerritos. Redevelopment has become a way cities are competing with each other for sales tax development. Once government is in the business of subsidizing certain business at the expense of others, everybody wants part of the gravy train. Once government, local or federal, becomes intertwined in the economy to such an extent they are picking winners or losers, it's not good fiscal policy, not good public policy. This is what redevelopment has become."

Assemblyman Scott Wildman (D-Glendale), Chairman Joint Committee on Legislative Audit. "In my first term I started looking into Redevelopment, whew! This is a complex and long standing issue. The Joint Audit Committee looks at each district, we have a strange charge, that of assuring the intent of legislation is accurately reflected in the programs. Redevelopment is a complex interlinking of taxing agencies. We have lost sight of the original intent of what the legislation was...can't define whether these are Redevelopment or Development agencies...can't find what difference is between Joint Powers Jurisdiction that have been put together, that don't have to have the vote of the electorate to impose certain kinds of taxes. RDAs can do Eminent Domain, take land and give over to private entities. There was a huge mushrooming of redevelopment after Prop. 13 was passed. I have to look back at...lax definition of blight, creative implementation of Redevelopment throughout the State. Housing surpluses...huge surpluses not expended for low income housing. Some communities don't want low income housing, they want retail."

"Application of the law has changed to direct redevelopment a different way,...Joint Powers Authority can issue debt without the vote of voters. Redevelopment can issue debt without the vote of voters. We found public Jurisdictions will get together...Orange County Redevelopment funds go to schools, schools have to issue debt to cover their costs...not a consistent application in the same community. Different cycles of elected officials, who do not have financial expertise are ripe to people who have a bill of goods to sell. Fundamentally what we are looking at, using public money to finance private development. Whether that's good or bad I don't know, whether that's the intent of the legislation, I am pretty clear that it never was the intent to do that."

"There is a huge amount of government that doesn't necessarily work together. The idea of oversight of RDAs, I think that's an idea that is long in coming and needs to occur. After discussing the Auditor's report with the State Auditor, that's one of the fundamental issues that he believes needs to occur, is that we need some kind of mechanism to ensure we have some consistency in terms of being consistent with the intent of legislation."

"The real losers in redevelopment have been the schools and I think that is a crime."

Question: "You say schools are the big losers, would you clarify that?"
Answer: "RDAs are sucking the money that would have been invested in schools, you have $800 million the State is reimbursing schools for money they won't get from the increase in property taxes in a redevelopment zone.

Under AB1290 33% (of tax increment ) goes back to schools. This is a house of cards built up without a real definition of what they are. We need to define what blight is. We need to define what the intent of the legislation was."

Assemblywoman Debra Bowen (D-Marina Del Rey) "Reform came from some of the worst abuses, like in the desert city of Palm Desert, that declared empty desert without a gulf course is blighted. A lot of what I hear when I talk to people about redevelopment is that one of the primary problems is that we are not getting enforcement of existing laws...a lot of the questionable projects I am aware of, if looked at by a court of law, would not hold up. Who is doing the oversight? The state Auditor looks at what is happening at various state agencies, can be asked to look at a local level...Cities are doing cash box zoning, cities compete for sales tax dollars. We are getting more retail and less manufacturing and less housing...Retail is not good for the state, retail jobs pay a lot less."

Scott Wilk - Granada Hills Chief of Staff for Assemblyman Tom McClintock Told of his personal experience of buying what he considered a very nice home with good schools, until the City of Santa Clarita declared itself blighted. Wilk asked for support letters for AB1677, that would give the vote to the community if they wanted redevelopment or not and give citizens a vote on bonds. The hearing is set for April 29. (see legislation)

Chris Sutton - Attorney Pasadena "Recent legal precedents set; the Court of Appeals held that the North Hollywood P.A.C. is not entitled to choose its own lawyer, that the City of Los Angeles could choose lawyer for P.A.C. This is a sad case of miss application of the law. P.A.C.s throughout the State have rewritten plans and forced the city council to have different redevelopment plans. After the Northridge earthquake the City of Santa Clarita, a new city, declared itself 90% blighted. Because of AB1290 the school district and county could not file a lawsuit to challenge it, so the water district challenged the redevelopment plan. The trial court struck it down and the Court of Appeal affirmed the decision that to declare 90% of Santa Clarita blighted is simply absurd. Attorney General Lungren filed a Amicus brief and Joint Suit. Atty. Gen. Lungren has done more than any prior Atty. Gen. to protect the State's interest when redevelopment is passed. To challenge redevelopment plans, make objections known in writing often."

Assemblyman Bernie Richter (R-Chico) "The way to change Redevelopment is by initiative. In my view that is what needs to be done, put AB1677 into initiative form." (see legislation )

Joel Fox-Howard Jarvis Taxpayers Association- "The revolutionary aspect of Prop. 13, is that for the first time certainty in taxation belongs to the taxpayer...they know what the tax is going to be, Prop. 13 links the property tax to the property buyer's ability to pay. Prop. 13 did the job it was designed to do, that is keep people in their homes and prevent people from becoming slaves to the taxmaster. The power to tax is the essence of government, the control of taxation is the control of government. We the people must control the government, therefore we the people must control taxation...local government has been very clever in turning to other devices, such as fees, assessments, in fact Redevelopment and our taxes keep going up. Assessments became controversial when they were used to circumvent Prop. 13, much like the R.D.A.s.

These tax end runs have been so successful that despite the tax cut 20 years ago state and local government are spending today more of your personal income than they were in 1978. Controlling redevelopment is important to taxpayers I think, not only because of the great debt that is being run up and could be a potential liability to the public at large,....also when redevelopment denies this property tax revenue for a lot of essential services, the schools and the counties, you know where they are coming when they say they don't have enough money, back to the taxpayer.

Redevelopment is now on our radar screen. Let me warn you controlling redevelopment will be a lot different fight than the success we had with Prop. 13 and 218. With property taxes and assessments citizens were directly affected, they saw the tax go up, received the property tax bill in their home and wrote the checks...but there is a disconnect with the redevelopment issue, you will have to bridge the gap. There is no direct pain from C.R.A. to the property tax payer."

Michael Dardia - "Subsidizing Redevelopment in California", Public Policy Institute of California "Thank you, I must admit this is a very different reception than I got in Monterey." (California Redevelopment Association Conference) ...The study sought to answer two questions raised by critics of redevelopment: How blighted are project areas, and how much are RDAs subsidized by tax increment financing?...More than half of the RDAs in the state were created after the passage of Prop. 13 ...An RDA receives the property tax increases in the project area for the life of a project-often 30 years or more. Without the project, the property tax revenues would be shared among counties, cities, schools, and special districts...the passage of AB1290 set a uniform pass-through rate of approximately 33%...The Legislative Analyst's Office (LAO) reported that RDAs placed about 100 square miles of land in new project areas in 1993 alone more than double the average amount placed in the preceding three years...It seems implausible that these areas are all suffering from such a combination of blighting conditions " that it constitutes a serious physical and economic burden on the community." Also RDAs receive over 8% of all property tax revenues, of the $1.5 billion ...$800 million from school districts, schools or made whole by the state, counties lose $300 million a year...In dollar value, the 38 projects studied collectively received $78 million in tax increment revenues, about $40 million of which can be explained by the RDAs' effect on property values. Thus, the subsidy from other jurisdictions to the RDAs totaled $38 million in FY1994-1995."

The study makes four recommendations to state lawmakers that should help resolve the controversy surrounding redevelopment:
* The legislature should formally clarify the goals of redevelopment.
* The definition of blight should be aligned with the goals of redevelopment and should be made more precise.
* Some form of oversight authority should be established to monitor RDA behavior.
* If the legislature intends redevelopment to be self-financing rather than heavily subsidized, the pass through rate should be increased significantly.

To order "Subsidizing Redevelopment in California" call (415) 291-4400 or http://www.ppic.org
Also for "When Government Fails, The Orange County Bankruptcy", "Field of Schemes, Stadium Swindles Turn Public Money into Private Profit", order from http://www.amazon.com.

Municipal Officials speaking out:
Bellflower Mayor Ruth Gilson, "citizens voted out street lighting assessments, only city in L.A. county who is not a member of League of California Cities."
Inglewood City Councilwoman Judy Dunlap, "RDA to subsidize football stadium at (blighted) Hollywood Park for $50 million, lost Lakers to L.A."
Morgan Hill, Bev Freeman, "RDA gave $2.5 million to Abbot Labs."
Gardena, Gwin Duffy, "no Redevelopment yet!"
Artesia, Sally Flowers, "no redevelopment at this time, big concerns about AB1342."
Lake Forest, Marsha Rudolph, "Dec. 1, 1991 Lake Forest became a new city...City Council is targeting redevelopment for Lake Forest."

Quotes from citizen activist:
Richard Erganian, Fresno, "they (RDAs) don't eliminate blight, they just move it to another area and expand it."
Hollywood, John Walsh, P.A.C. member , "Oscar goes on welfare, Oscar has the golden hand shake".
Hemet, Art Scribner, Citizens for Fair Government, "$4 million in L & M. housing not done...RDA gave sales tax to an existing Sears store, from the whole mall".
Corona, Bruce McKeller, Southeast Grand Blvd. Neighborhood Association, "The threat of redevelopment in Corona has been not only to our city's financial future, it has also hit at the heart of the democratic process."
Maxine Brazil, Lathrop, (population 9,000) stopped redevelopment with 181 signatures on a petition.

Mission Viejo's Committee for Integrity in Government conducted a survey of residents during the July 4th Mission Viejo Street Fair. 135 responses were placed in the ballot box by local residents. The objective of the survey was to both inform residents of 7 selected local (and statewide) issues and to obtain their feedback.

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