On March 7, redevelopment fighters from throughout California, from across the United States and even from England, gathered to celebrate the death of California’s redevelopment agencies. The event was the final — last ever — meeting of Municipal Officials for Redevelopment Reform in Sacramento. The venue was the 16th floor of the Holiday Inn on L Street.
The moderator, host and leader of Municipal Officials for Redevelopment Reform, Assemblyman Chris Norby (Fullerton), took note of the special location. “From here you can see the Capitol, to the east the Sierras, behind me the verdant Sacramento River and over there,” he said, pointing, “The K Street Mall.” What a laugh! The K Street Mall is a decades-old redevelopment district, which despite multiple incarnations, is a decades-old failure. K Street is also the location of the mermaid bar, which, constructed with redevelopment subsidy, stands as the focal symbol of redevelopment gone wrong.
Even though redevelopment failures are obvious, and even apparent successes are really facades, many thought the California redevelopment agencies all powerful and immortal. The fact that they are now dead was inconceivable only a little more than a year ago.
“You’ve taken down Goliath,” Bill Maurer of the Institute for Justice told the group. Christina Walsh of the Castle Coalition even called California redevelopment agencies “the most formidable foe in the country.” Killing this monster now brings California in line with 44 other states, all of whom addressed eminent domain abuse in the wake of the Supreme Court’s infamous 2005 Kelo decision.
Maurer warned, however: “Remain vigilant.” All redevelopment fighters have been burned by politicians flipping and flopping, when it comes to redevelopment. Like a zombie, or “like Freddy Krueger,” Norby warned, “they will try to bring it back. We need to make sure the rotting corpse of redevelopment does not come back to life.” And we know there are schemes to revive some version of redevelopment.
Currently, there are bills in the Legislature to address the redevelopment funds set aside for affordable housing. There are also schemes to promote “infrastructure financing districts,” which will use tax increment financing and may reduce or eliminate requirements for public votes. Attorney Craig Powell of Eye on Sacramento, a local government watchdog group, warned of the “pernicious impact of planning.” He called this the “Year of the Expert,” wherein local governments will bow to planning “experts.” Voters will be sidestepped and property rights will be abused, as planners push “transit villages” in the name of being “green.”
The most immediate concern, however, are the “successor agencies.” These “embalmer agencies,” as John Walsh from Hollywood tagged them, are tasked with liquidating redevelopment agency assets and debt. This process is ripe local for abuse.
Let’s look at San Diego. Earlier this year the city selected itself as the successor agency for the local redevelopment agency. Subsequently, the City Council rubberstamped a $6.5 billion “enforceable obligation payment schedule.” This is the list of outstanding redevelopment agency debt and outstanding contracts, for which the successor agency will continue to collect tax increment from the former redevelopment project areas. It is clear that many of the projects, contracts and debts listed on the enforceable obligation payment schedule are dubious at best.
We have public statements from Mayor Jerry Sanders, Councilman Kevin Faulconer and Southeastern Economic Development Corp. president Jerry Groomes referring to projects in the pipeline and “staying in the game.” It is plain to see that they are planning to continue redevelopment indefinitely. How else can they explain an enforceable obligation payment schedule worth $6.5 billion?
As attorney Chris Sutton told the Municipal Officials for Redevelopment Reform gathering, San Diego is not an isolated incident. “The successor agencies are loading the obligated payment schedules with baloney, preparing to continue [redevelopment] forever… It’s massive fraud.” The oversight boards, the county auditor/controllers and the Department of Finance have an impossible task. Sutton’s guess is that the Department of Finance will invalidate all enforceable obligation payment schedules to buy time for proper review. (Later in the day I spoke with a Department of Finance official, who validated Sutton’s guess.)
It seems, therefore, the gateway to redevelopment agency resurrection is through the successor agencies. If we aim to keep the redevelopment zombie dead, don’t drive a stake through the heart or wing it with a gunshot. That won’t work. No, for the living to keep this corpse dead and buried, question everything on the enforceable obligation payment schedule.
Brian T. Peterson is CEO of the Grantville Action Group.
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