Friday, January 9, 2015

Redevelopment 2.0 reviving Crony Capitalism


California Democrats are reviving crony capitalist agencies
SACRAMENTO — The same Jerry Brown who ended California’s controversial redevelopment agencies in 2011 is now considering legislation that would bring back something similar, but arguably with fewer restrictions on eminent-domain abuse and debt spending.
Redevelopment agencies sprung from the state’s 1940s-era urban-renewal law — designed to help local officials clean up blighted inner cities. But they morphed into a financing tool by which officials could clear away homes and businesses and float bonds that help developers build tax-generating shopping centers sought by city officials.
Redevelopment died in California — not because of official concern about the abuse of eminent domain, but because Gov. Jerry Brown and the Legislature needed a source of funds to balance the budget. These agencies diverted 12 percent of the general-fund budget from traditional public services through a mechanism known as Tax Increment Financing, which sent property-tax growth to the redevelopment agencies.
The League of California Cities and Sen. Darrell Steinberg, D-Sacramento, have been pushing measures that would bring back redevelopment in some form, but without the tax-increment financing that let localities unilaterally grab other agencies’ tax dollars.
Brown has vetoed past measures, but reportedly is supportive of SB 628, which was one of those last-minute gut-and-amend bills that didn’t go thorough vetting before passage. It passed by one vote in the Senate, with that coming from Senate Republican leader Bob Huff, whose wife has worked for one of the bill’s prominent supporters (City of Industry’s Ed Roski, who is pursing an NFL stadium there).
Redevelopment revivalists have promoted the use of Infrastructure Financing Districts as a partial replacement for the defunct agencies. This bill would create something called Enhanced Infrastructure Financing Districts that puts those districts on steroids.
“It’s Redevelopment 2.0 without any protections whatsoever,” said David Wolfe, legislative director of the conservative Howard Jarvis Taxpayers Association. In a letter to the Legislature, Wolfe noted that under the old redevelopment law, a city would have to determine that there is blight before creating a project area.
“While in our view, this finding of blight was never comprehensive enough … at least some guidelines were in place,” he added. “No findings of blight need to be made in the EIFD process under SB 628. This makes it far too easy to use eminent domain to abuse taxpayers by taking private property for a private use.”
The old blight findings often were a joke. But now as soon as these districts are approved, there are even fewer restrictions on what kind of projects can be funded. These new infrastructure districts are pitched as a way to help cities upgrade roads, sewer pipes and levees. But nearly anything will be OK including “sustainable communities strategies,” “brownfields restoration,” “watershed land” and commercial property uses. Redevelopment offered wide latitude to publicly fund private development projects — and this bill could make it even wider.
Compared to standard infrastructure finance districts, these enhanced ones would lower the threshold from two-thirds voter approval to 55 percent approval. They would expand the bond-repayment time from 30 years to 45 years. The bill specifically allows the funding of these facilities for private benefit.
Some groups that represent low-income residents are fearful of the bill will give city officials more power to remove existing residents from downtown areas — and without requiring that they set aside money for low-income housing.
My first taste of California’s “redevelopment” law came in the late 1990s, when I reported on a “public” parking structure being built at a private shopping mall. Over the years, I wrote about many redevelopment projects that ran up public debt and ran roughshod over property rights.
Cities need to find money to upgrade infrastructure. It would have been nice had the Republican leader at least first exacted some taxpayer protections. Furthermore, this Legislature has consistently blocked city efforts to rein in their existing labor costs through pension reform and other measures. Instead it offers to replace a bad financing law with something that may arguably be worse.
Steven Greenhut is the California columnist for U-T San Diego. Write to him at

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