Redevelopment promoters weep over supreme court decision

"The good news is the bad news — that the state is desperate for money,” says Richard Rider. If the state’s books were in good shape, the corporate welfare lobby would probably succeed in getting the legislature to come up with something that would reverse or soften the California Supreme Court’s late-December decision to abolish redevelopment agencies, he says.

“The special interest groups have the money. A few years ago they would have been successful,” says Rider, chairman of San Diego Tax Fighters. There will probably be a lengthy, contentious legal donnybrook, but the pro-redevelopment forces may lack the horses.

The state’s high court went along with Governor Jerry Brown and the legislature’s plan to abolish redevelopment agencies, then stomped on a compromise measure that would have permitted the agencies to stay in business but kick back some loot to the schools and counties that have been fleeced for years.

From a legal perspective, the court hit the nail on the head, says San Diego attorney Walter Spath III. “The law was pretty clear-cut,” he says.

About 400 state redevelopment agencies are supposed to shut down February 1 but are battling for an extension. Inevitably, there will be intense lobbying for legislation to overturn the court — perhaps by the initiative process.

“If the California Teachers Association and the broader education lobby are willing to support a compromise, something may emerge,” says W. Erik Bruvold, president of the National University System Institute for Policy Research. “If the education lobby opposes it, I think redevelopment is dead in California.”

Many will dance on that grave. Redevelopment started after World War II as a way to lift up blighted, poverty-stricken neighborhoods. But the concept was kidnapped by the corporate welfare crowd: pro sports team owners, auto dealers, retailers, hoteliers, and multifarious other businesses used redevelopment bucks to bolster their own bottom lines. Only 20 percent of the funds are supposed to go to affordable housing, and there are questions whether the resulting homes are really affordable; that 20 percent threshold may be misleading.

“The list of questionable developments is sad and sordid,” says Bruvold. The big, subsidized developers utilized and abused eminent domain, bidless contracts, and so-called tax increment financing (use of future tax gains to finance current projects) to build reverse–Robin Hood castles enriching the affluent at the expense of taxpayers and schools.

The concept of “blight” became meaningless: “The way the law works, it’s blighted because they say it’s blighted,” says Spath. Citizens cocked an eyebrow at egregious abuses: Coronado and guard-gated Indian Wells in the Coachella Valley having purportedly blighted redevelopment areas, for example.

Redevelopment boosters are now weeping that economies will stagnate and jobs will be lost. Nonsense. Redevelopment never created growth or jobs; it just redistributed them. In February of last year, the nonpartisan California Legislative Analyst’s Office produced a report noting, “While redevelopment leads to economic development within project areas, there is no reliable evidence that it attracts businesses to the state or increases overall regional economic development.” Similarly, there is little evidence that redevelopment increases regional jobs or raises property values. The prosperity resulting from one project area is the loss to another.

“Redevelopment has been a cash cow for developers — it should be called the ‘developers’ income enhancement fund,’” says Mike Aguirre, former city attorney. He, too, believes that attempts to sway legislators to find a way around the court’s decision will fail. Aguirre sees the battle as one between government employees who want their pensions preserved and the redevelopment lobby. “The redevelopment people have to build a coalition, and public unions know [the money] comes out of their pensions…both Democrats and Republicans are united against redevelopment.”

There is much truth to that. The supreme court that knocked down redevelopment almost unanimously has only one member who was appointed by a Democratic governor. Through the years, Republicans, Democrats, and Libertarians have been complaining loudly about redevelopment abuses.

Says Bruce Henderson, former councilmember, “There is no [significant] constituency for re-creating redevelopment. The only constituencies having any voice would be contractors, sports team owners, [construction] labor unions, hotel owners.” They will go to Sacramento and say that redevelopment “increases the size of the pie, but nobody says that anymore except people who say downtown stadiums create economic development,” and that has been thoroughly disproven.

However, does the broad public understand that redevelopment is a scam benefitting plutocrats? Does it understand that subsidies to big businesses come out of small businesses’ and taxpayers’ hides? And subsidies for pro sports stadiums guarantee that infrastructure will continue being neglected?

The problem will be the media. They make money from pro sports, shopping centers, big-box retailers, auto dealers, theaters, ad nauseam. Editorially, most oppose subsidies to the needy, but they all favor subsidies that boost their own fortunes. So the news about redevelopment will be slanted.

A classic example of this media disingenuousness arose in San Diego in 1998. A grand jury report sharply criticized the Padres ballpark deal. A local judge sat on the study for three days. The grand jury foreman finally got the study released the day before the election. The Union-Tribune eviscerated the story and buried it. On Election Day, the public was generally unaware of the grand jury’s revealing study.

The current U-T management has already said it wants positive coverage of a possible Chargers stadium and cheerleading for local business. ’Nuf said. “Statewide, the media will be in favor of the special interests,” says Rider, with the exception of Sacramento, where the media target a government-dominated market.

But even with a public deliberately misinformed by self-aggrandizing mainstream media, redevelopment may get what it deserves: the gallows.