Should taxpayer money go to schools and fire protection, or should it be used to subsidize shopping malls, big-box retailers, auto plazas, movie multiplexes, hotels, and pro sports stadiums? This may be California’s biggest battle of the year. You may see bumper stickers with the words “Schools or Costco?”
Governor Jerry Brown has proposed the elimination of 400 redevelopment agencies around the state that divert $6 billion a year from critical public sector services and use the loot to subsidize private sector real estate projects, including pro sports stadiums and even casinos. “That’s 12 percent of all property taxes statewide,” says Assemblyman Chris Norby of Orange County, who has opposed redevelopment abuses for years.
California government-financed redevelopment was innocently hatched in the mid-1940s. It was meant to eliminate blight and provide affordable housing. However, in effect, “Once something is declared blighted it is presumed to be blighted forever,” says Christopher Sutton, a Pasadena lawyer who is involved in one of the suits to invalidate the late-night, hush-hush agreement pushed through the legislature last year that would lift the cap on downtown spending by the Centre City Development Corporation; the agreement would permit an insolvent city to provide a $600 million subsidy for a Chargers stadium. “The presumption of blight is fundamentally dishonest and antidemocratic,” says Sutton.
Adds Sutton, “Redevelopment does not create jobs. It moves jobs and buildings between cities and back around.” That’s exactly what the legislative analyst’s office concluded January 18, to wit: “The presence of a redevelopment area might shift development from one location to another, but does not increase economic activity statewide.”
Similarly, say Sutton and Norby (and others who have studied redevelopment), the requisite affordable housing is not provided in many projects. That’s particularly true in San Diego.
But does the public understand that the potholes destroying their cars and the cutbacks in fire and police protection are a direct result of Centre City hogging the money for downtown projects that should be financed with private capital? The public’s grasp of the scam is what the legislators will have to wrestle with.
It is significant that Orange County assemblyman Norby is a conservative Republican. It’s not just liberals who realize that redevelopment has turned into a corporate-welfare grab. Democrats are in the majority in the legislature; most will probably back Brown’s plan.
Thad Kousser, professor of political science at the University of California San Diego, thinks there is a good chance that Brown’s redevelopment package can pass. “If we are to make major cuts to the University of California system, to community colleges, why should we spare redevelopment agencies when some of the money may wind up in private hands?” he asks. Public sector labor unions have big power in the legislature and will likely side with Democrats. The California Redevelopment Association, which lobbies for the agencies, “is not as powerful as the teachers, prison officers.”
“I think [Brown’s plan] has a very good chance,” says Norby. “Both Democrats and Republicans are for it.” One argument could be that redevelopment has transformed a number of areas around the state. But cities keep finding blight. “If the patient is healed, why keep going to the doctor every day?”
“This will be a battle of special interests rather than something ideological,” says Libertarian Richard Rider. “The construction industry will be giving big bucks. But the statewide labor unions will be in favor of moving more money to Sacramento. May the wealthiest cabal win.”
“It’s doubtful that it will pass,” says Jim Mills, former president pro tem of the state senate, who says that Centre City “has lost its reason for existence.” But in Sacramento, “The Republicans will vote against it and likely get some Democrats.”
One problem is that in San Diego and elsewhere, the downtown developers manipulate the mainstream media. Example: as soon as Brown’s plan was leaked, major local newspapers and TV stations began wailing that the program would hamstring planning efforts. In San Diego, major media rushed to tout redevelopment’s so-called successes: Horton Plaza and Petco Park.
Horton Plaza? It’s an architectural novelty but a financial flop. It opened in 1985 and was successful for a stretch, but soon the anchor retail stores began moving out. So did smaller retailers and restaurants. Centre City moved one of its own offices there to keep the vacancy rate down. Early last year, Centre City told a Reader reporter that the 30,000-plus people living downtown were not sufficient to sustain a retail mall and 40 to 50 percent of shoppers were tourists. Retailers negotiated lower rates; the center delayed a major renovation. Rich Mexicans continued to shop at Fashion Valley instead of Horton Plaza.
Just recently, Horton’s owner, Westfield America, wangled a real redevelopment rip-off. It would tear down one of its largest buildings. The City would shell out more than $8 million to build a park in the vacant space. Westfield would take over maintenance of the park and schedule 200 yearly events there. Get this: the City would relieve Westfield of $35 million in profit-sharing payments owed through 2036. “This is an unbelievable con,” says former Councilmember Bruce Henderson. “[Westfield] said, ‘We are desperate to tear a building down. Would you pay us $35 million to do it?’” The small park in front of the building has been seedy for years. Who is to say the park won’t remain seedy? “We should have given them a demolition permit, told them we will keep our $35 million in profit sharing, and said we won’t pay a dime for [anything else].” If Westfield wants a park there, it should pay for it, he says. It’s more proof that when the City negotiates with the private sector, the City invariably “gets snookered.”
And Petco Park? The City plunked in $300 million. It subsidized nearby condos that can’t attract residents and hotels that can’t attract visitors. Padre attendance at Petco is lower than it was at Qualcomm, and the ballpark is at least a $20 million annual drain on the City.
Now the downtown overlords are pushing for a massive Chargers stadium subsidy, even though the only thing blighted in downtown San Diego is the City’s financial condition. The hastily drawn, secret bill to lift Centre City’s cap “doesn’t meet the smell test,” says Pasadena lawyer Sutton. “It was written on a notepad and grafted onto a bill regarding farmland. The legislature has no shame. These giveaways to developers are no different than Tammany Hall [New York City’s 19th-century graft haven]. The development agencies take the money and dole it out to political contributors.”
San Diego attorney Mike Aguirre has filed a suit against the legislature’s guerrilla raid. The defendants are three state agencies. “A finding that a project area is blighted is the absolute prerequisite for redevelopment,” says the suit. But Senate Bill 863 was rammed through “with no committee hearings, no debate before the public, behind closed doors, and while the City of San Diego and the Centre City Development Corporation were in the middle of conducting a study to determine if the relevant project area was sufficiently blighted,” says the suit. It cites a recent appellate decision in which the court rejected Glendora’s blight claim under similar circumstances. Aguirre filed in Sacramento “so we don’t sue the power structure in San Diego; we make them play an away game.”
Says Aguirre, “It is time to wean the developers from subsidies and have them embrace competition.”
That has worked in downtown Los Angeles, says Steve Erie, professor of political science at the University of California San Diego. He and a Ph.D. candidate, Vlad Kogan, have shown that in the late 1980s and early 1990s, Los Angeles was able to rein in its redevelopment agency, move tax dollars from downtown to the rest of the city, and block the big subsidies for pro sports facilities. Result: “a downtown renaissance with private capital,” says Erie. But San Diego “is the welfare queen of redevelopment agencies, still on the dole” and still steering taxpayer money downtown. “No other city has such a peculiar institution to capture the benefits for downtown.”
Jerry Brown might be able to do something about that.