April 23, 2008 > Redevelopment - boom or bust?
Redevelopment - boom or bust?
Part II: Blight Makes Right
This is the second chapter reprinted with permission from Redevelopment: The Unknown Government, A Report to the People of California published by Municipal Officials for Redevelopment Reform (MORR). Ninth Edition, September 2007.
All a city need do to create or expand a redevelopment area is to declare it "blighted."
This is easily done. State law is so vague that most anything has been designated as "blight." Parkland, new residential areas, professional baseball stadiums, oil fields, shopping centers, orange groves, open desert and dry riverbeds have all been designated as "blight" for redevelopment purposes.
Blight consultants know that blight is a forgone conclusion, regardless of actual conditions. Fully 30% of all urbanized land in California has now been declared blighted.
"Cities adopted very loose and very creative definitions of blight," writes syndicated Sacramento Bee columnist Dan Walters, author and long-time state policy analyst. "Often vacant, never-developed land is branded as blighted to allow its inclusion in a redevelopment zone."
A city park in Lancaster was declared blighted to pave 19 acres of parkland and axe 100 trees for a new Costco. Raw desert acreage in California City was declared blighted to justify its seizure for a Hyundai test track.
An Orange County public health facility was declared blighted by the Santa Ana Redevelopment Agency in order to turn the property over to a BMW dealer.
Blight has been proclaimed in some of California's most affluent cities. Indian Wells, a guard-gated community with an average $210,000 household income, has 3,100 acres in a consolidated "Whitewater Project Area."
Redevelopment has little to do with cleaning up real urban decay. In fact, the California Redevelopment Association is making an expansion push in new suburban cities. This strategy was outline in the CRA-sponsored seminar "Suburbs: The Greatest Redevelopment Opportunity" on March 8, 2006 held in Monterey.
Since the blight designation expands eminent domain powers and building permits can now be denied if an applicant does not conform precisely to the redevelopment plan, citizen groups often mount legal challenges. Counties typically challenge blight findings to protect their revenue stream from agency diversions.
Courts have overturned blight findings in Mammoth Lakes, Diamond Bar and Temecula, invalidating their redevelopment plans. Others are challenged by counties and school districts that stand to lose major property tax revenue if a new redevelopment area is created.
Recent state legislation has tightened definitions of blight, particularly those involving open and agricultural land. Still enforcement is lax, legal challenges costly and most agencies were already created long before recent reform attempts.
Once the consultant's blight findings are ratified, a city may create or expand a redevelopment area. Voter approval is never asked. Citizens can force a vote by gathering 10% of the signatures of all registered voters within 30 days of the council action. Where this has occurred, redevelopment nearly always loses by wide margins (rejected in Montebello by 82%, La Puente by 67%, Ventura by 57%, Los Alamitos by 55%, Half Moon Bay by 76% for example).
The requirements to force a vote are difficult to meet, however. In the vast majority of cases, a popular vote is never held. Rather, the consultant's findings of blight are quickly certified. A law firm is then retained to draw up the paperwork and defend against legal challenges.
A growing number of law firms specialize in redevelopment. Like the consultants, they are members of the California Redevelopment Association, a Sacramento-based lobby. They are listed in the CRA's directory and advertise in its newsletter. Their livelihood depends on the aggressive use of redevelopment and increasingly imaginative definitions of blight.
To eliminate alleged blight, a redevelopment agency, once created has four extraordinary powers held by no other government authority.
1) Tax Increment: a redevelopment agency has the exclusive use of all increases in property tax revenues ("tax increment") generated in its designated project areas.
2) Bonded Debt: An agency has the power to sell bonds secured against future tax increment and may do so without voter approval.
3) Business Subsidies: An agency has the power to give public money directly to developers and other private businesses in the form of cash grants, tax rebates, free land or public improvements.
4) Eminent Domain: An agency has expanded powers to condemn private property, not just for public use, but to transfer to other private owners.
These four powers represent an enormous expansion of government intrusion into our traditional system of private property and free enterprise. Let us carefully consider the costs of this power and if it has done anything to eliminate real blight.