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San Diego's redevelopment pigs want back at the trough
But “the state needs every nickel it can get”
Mayor Jerry Sanders wants Centre City Development Corporation, which has spearheaded the downtown money hogging, to be in charge of planning throughout the city. Hmm.
Hell hath no fury like a bureaucrat fearful of losing a cushy job or a real estate kingpin fearful of losing a fat government subsidy. Therefore, the move to bring back redevelopment in some form has turned decidedly dirty. San Diego, that bastion of corporate welfare (euphemistically called public-private partnerships), is in the forefront.
Redevelopment should be dead of its own abuses. After World War II, it was set up to rehabilitate truly blighted neighborhoods. Over time, business hijacked the concept, and redevelopment funds were used to subsidize hotels, shopping centers, auto dealers, movie theaters, pro sports facilities, ad nauseam, and the definition of blight became meaningless. Last year, Governor Jerry Brown took advantage of public revulsion of these abuses to get the legislature to vote to close redevelopment agencies so money could go back to the schools, from which it had been stolen. The California Supreme Court affirmed the death knell.
Erik Bruvold says redevelopment agencies “fast-tracked” projects.
More than 400 California redevelopment agencies began shutting down February 1. But they had had more than a year to plot evasion maneuvers, and “jurisdiction after jurisdiction throughout the state [had] tried to figure out how to fast-track” projects to scoot under the wire, says Erik Bruvold, president of National University System Institute for Policy Research.
Now, successor agencies have long lists of so-called “enforceable obligation payment schedules,” or projects that, they assert, must legally go forward, even with the redevelopment agencies shuttered. San Diego has a stunning $6.5 billion worth of these projects on its list, and half are downtown, which for decades has pigged out while the rest of the city and its infrastructure starved.
“Cities are trying to create bogus redevelopment debt,” says Dr. Brian Peterson, a veterinarian who heads the Grantville Action Group, which fights redevelopment abuses.
Donna Frye endorses redevelopment for affordable housing.
Those phony lists will have to be culled by the Department of Finance. It doesn’t have the horses, or the time, to go over hundreds of dubious claims. “It’s not clear to me how much staff the Department of Finance has to verify these lists,” says former councilmember Donna Frye, warning that cities padding those lists might suffer some unforeseen consequences.
The Department of Finance may throw up its hands temporarily: “I think that rejecting all the [enforceable obligation payment schedules] is something they are thinking about. They can throw [the lists] back to the successor agencies and tell them to come up with new [lists] that are appropriate,” says Peterson.
Now, lobbyists with cash-filled suitcases are escalating efforts in Sacramento. Darrell Steinberg, president pro tem of the state senate, has introduced two bills that would permit cities to form new entities that could tap billions of dollars in assets of the former redevelopment agencies. However, even Steinberg admits that the bills will have less chance if state financial woes persist.
These bills face two stumbling blocks. First, if state finances remain in the muck, there will be pressure to put scarce resources elsewhere. Second, there is Governor Brown. “What I am hearing is that Brown is not going to sign off on anything related to redevelopment,” says Peterson. “If legislators want to bring back redevelopment, he will veto it.” Those in the pro-redevelopment camp are convinced that Brown might cave. One persuasive argument that he won’t: Brown got his bill through the legislature and had it ratified by the highest court. Why should he cede the ground he gained?
Vlad Kogan: “Tax increment financing
is done.”
There is one thing that people seem to agree on: the financial prestidigitation called “tax increment financing” has had its day. “Tax increment financing is done,” says Vlad Kogan, Ph.D. candidate in political science at the University of California San Diego.
This is financing on the come. Governments expect future tax revenue to subsidize current redevelopment. The theory is that a project will raise real estate values in the neighborhood and thereby boost property tax receipts. But through the years, governments have found that projects in truly run-down areas don’t necessarily bring that tax revenue.
So developers have zeroed in on nonblighted areas and called them blighted. Abuse of eminent domain has become widespread. Tax increment financing has come to mean taxpayer subsidization of projects that should have been financed with private capital.
That kind of financing is dead because “the state needs every nickel it can get,” says Bruvold. The education lobby and other power groups that have Brown’s ear will push hard to get the money that once went to corporate welfare.
The pro-development forces are saying that redevelopment can come back in some modified form for such do-good purposes as affordable housing. But that’s just a stalking horse. Frye, for instance, would like to see money go to public projects such as affordable housing, but she is realistic. “I would like to believe that private projects would be less likely to be approved,” she says, “but I can’t say that, given the politics and cronyism” in state and local government.
Bruvold, too, says projects for the public good have little clout. “There will be public-private resources that flow to [private sector] developments,” says Bruvold. Those subsidized private deals, such as for a pro sports stadium and hotels “have a big megaphone with local media,” he notes. He even believes that a new Chargers stadium will be built. “The likely scenario is selling Qualcomm Stadium and the sports arena and using the proceeds to build a new stadium. Killing redevelopment will make it harder, but the end of redevelopment and tax increment financing does not stop the City from trying.”
Steve Erie questions if oversight boards will be “undersight.”
No doubt. Mayor Jerry Sanders wants Centre City Development Corporation, which has spearheaded the downtown money hogging, to be in charge of planning throughout the city. Hmm. Seventeen oversight boards in the county will supervise the transition to successor agencies. “But will they be undersight boards?” asks Steve Erie, professor of political science at the University of California San Diego.
All things considered, however, the overall picture is promising, says Peterson. “Redevelopment as we have known it is dead,” he declares.
Here's something you might be interested in.
San Diego's redevelopment pigs want back at the trough
But “the state needs every nickel it can get”
San Diego's redevelopment pigs want back at the trough
But “the state needs every nickel it can get”
Mayor Jerry Sanders wants Centre City Development Corporation, which has spearheaded the downtown money hogging, to be in charge of planning throughout the city. Hmm.
Hell hath no fury like a bureaucrat fearful of losing a cushy job or a real estate kingpin fearful of losing a fat government subsidy. Therefore, the move to bring back redevelopment in some form has turned decidedly dirty. San Diego, that bastion of corporate welfare (euphemistically called public-private partnerships), is in the forefront.
Redevelopment should be dead of its own abuses. After World War II, it was set up to rehabilitate truly blighted neighborhoods. Over time, business hijacked the concept, and redevelopment funds were used to subsidize hotels, shopping centers, auto dealers, movie theaters, pro sports facilities, ad nauseam, and the definition of blight became meaningless. Last year, Governor Jerry Brown took advantage of public revulsion of these abuses to get the legislature to vote to close redevelopment agencies so money could go back to the schools, from which it had been stolen. The California Supreme Court affirmed the death knell.
Erik Bruvold says redevelopment agencies “fast-tracked” projects.
More than 400 California redevelopment agencies began shutting down February 1. But they had had more than a year to plot evasion maneuvers, and “jurisdiction after jurisdiction throughout the state [had] tried to figure out how to fast-track” projects to scoot under the wire, says Erik Bruvold, president of National University System Institute for Policy Research.
Now, successor agencies have long lists of so-called “enforceable obligation payment schedules,” or projects that, they assert, must legally go forward, even with the redevelopment agencies shuttered. San Diego has a stunning $6.5 billion worth of these projects on its list, and half are downtown, which for decades has pigged out while the rest of the city and its infrastructure starved.
“Cities are trying to create bogus redevelopment debt,” says Dr. Brian Peterson, a veterinarian who heads the Grantville Action Group, which fights redevelopment abuses.
Donna Frye endorses redevelopment for affordable housing.
Those phony lists will have to be culled by the Department of Finance. It doesn’t have the horses, or the time, to go over hundreds of dubious claims. “It’s not clear to me how much staff the Department of Finance has to verify these lists,” says former councilmember Donna Frye, warning that cities padding those lists might suffer some unforeseen consequences.
The Department of Finance may throw up its hands temporarily: “I think that rejecting all the [enforceable obligation payment schedules] is something they are thinking about. They can throw [the lists] back to the successor agencies and tell them to come up with new [lists] that are appropriate,” says Peterson.
Now, lobbyists with cash-filled suitcases are escalating efforts in Sacramento. Darrell Steinberg, president pro tem of the state senate, has introduced two bills that would permit cities to form new entities that could tap billions of dollars in assets of the former redevelopment agencies. However, even Steinberg admits that the bills will have less chance if state financial woes persist.
These bills face two stumbling blocks. First, if state finances remain in the muck, there will be pressure to put scarce resources elsewhere. Second, there is Governor Brown. “What I am hearing is that Brown is not going to sign off on anything related to redevelopment,” says Peterson. “If legislators want to bring back redevelopment, he will veto it.” Those in the pro-redevelopment camp are convinced that Brown might cave. One persuasive argument that he won’t: Brown got his bill through the legislature and had it ratified by the highest court. Why should he cede the ground he gained?
Vlad Kogan: “Tax increment financing
is done.”
There is one thing that people seem to agree on: the financial prestidigitation called “tax increment financing” has had its day. “Tax increment financing is done,” says Vlad Kogan, Ph.D. candidate in political science at the University of California San Diego.
This is financing on the come. Governments expect future tax revenue to subsidize current redevelopment. The theory is that a project will raise real estate values in the neighborhood and thereby boost property tax receipts. But through the years, governments have found that projects in truly run-down areas don’t necessarily bring that tax revenue.
So developers have zeroed in on nonblighted areas and called them blighted. Abuse of eminent domain has become widespread. Tax increment financing has come to mean taxpayer subsidization of projects that should have been financed with private capital.
That kind of financing is dead because “the state needs every nickel it can get,” says Bruvold. The education lobby and other power groups that have Brown’s ear will push hard to get the money that once went to corporate welfare.
The pro-development forces are saying that redevelopment can come back in some modified form for such do-good purposes as affordable housing. But that’s just a stalking horse. Frye, for instance, would like to see money go to public projects such as affordable housing, but she is realistic. “I would like to believe that private projects would be less likely to be approved,” she says, “but I can’t say that, given the politics and cronyism” in state and local government.
Bruvold, too, says projects for the public good have little clout. “There will be public-private resources that flow to [private sector] developments,” says Bruvold. Those subsidized private deals, such as for a pro sports stadium and hotels “have a big megaphone with local media,” he notes. He even believes that a new Chargers stadium will be built. “The likely scenario is selling Qualcomm Stadium and the sports arena and using the proceeds to build a new stadium. Killing redevelopment will make it harder, but the end of redevelopment and tax increment financing does not stop the City from trying.”
Steve Erie questions if oversight boards will be “undersight.”
No doubt. Mayor Jerry Sanders wants Centre City Development Corporation, which has spearheaded the downtown money hogging, to be in charge of planning throughout the city. Hmm. Seventeen oversight boards in the county will supervise the transition to successor agencies. “But will they be undersight boards?” asks Steve Erie, professor of political science at the University of California San Diego.
All things considered, however, the overall picture is promising, says Peterson. “Redevelopment as we have known it is dead,” he declares.
Comments
Don't underestimate the power and influence of the real estate industry. They place people in office and have the huge financial resources to influence legislation...and, I suspect, even legal decisions.
You are absolutely correct -- and your observation is particularly keen in San Diego, where real estate accounts for around 20% of the economy, among the highest in the nation. For decades, the real estate industry has owned local politicians; its lobbyists have consistently stolen from taxpayers while making sure that neighborhoods starve while downtown thrives. Best, Don Bauder
bhound, Yes. The SDAR has influenced land-use code changes under Jerry Sanders. They were furious with Dick Murphy for rejecting second units in single-family residential zones (euphemistically referred to as "granny flats," AKA "companion units"). They got the code change they wanted with Sanders and his planning department.
Sanders has been completely in the pocket of the real estate industry. Most of his predecessors were, too. Maureen O'Connor was the exception. Best, Don Bauder
Here's some wild speculation I was thinking about yesterday:
Does Magic Johnson know something everyone else doesn't? As was reported, Magic's group offered about 2.1B for the Dodgers - far more than was expected. Could it be that the Dodgers' value is set to increase with some sort of taxpayer-funded redevelopment?
Total speculation on my part, but given how much taxpayer money can increase the value of the sports franchise I wonder if this was part of that decision process.
My understanding of the Dodgers deal is that the cherry on top is the new, massive TV contract with Fox regional sports network. However, it would be fitting in some way, if redevelopment is part of the deal, because Dodger Stadium is one of the most notorious redevelopments ever. The Latino residents of Chavez Ravine were evicted via eminent domain, forced to leave with their belongings on their backs practically, bulldozers following right behind, mowing down their homes. This was to make way for Dodger Stadium, supposedly in the interest of public good.
Good points. The one good thing is that happened about 50 years ago. I think the TV contract could be the big draw. Best, Don Bauder
There is no "massive TV contract with Fox regional sports network". The Dodgers' current TV contract expires at the end of next season. The speculation is that the NEW contract, with whomever, could exceed $4billion ocer the course of 10+ years.
$4 billion is massive and the fact that it could be drawn up at the end of next season is close enough to make it a possible relevant factor in the money shelled out by Magic et al. Best, Don Bauder
I am quite sure is was more than just a possible relevant factor. I would imagine it played a large part in the decision. I was just pointing out the previous poster that there is no new TV deal yet, with Fox or anyone else.
The resident of Chavez Ravine were not evicted to make way for Dodger Stadium. That's a common misconception that many people have. Actually, Chavez Ravine was the site of a proposed Los Angeles public housing project in 1950, utilizing money from the Federal Housing Act of 1949. In July 1950, all residents of Chavez Ravine received letters from the city telling them that they would have to sell their homes in order to make the land available for what was being called the Elysian Park Heights project. By August 1952, Chavez Ravine was essentially a ghost town, although a few residents refused to leave and did have to be removed. At one point, the Federal gov't owned the land and the city of Los Angeles eventually bought it back from them. It wasn't until the 1956 World Series that Walter O'Malley first expressed an interest in relocating the dodgers to L.A., long after most of he population Chavez Ravine had left.
I can't be the adjudicator in this one because I really don't know which account is true. Best, Don Bauder
There is no need for an adjudicator because the facts are indisputable. Chavez Ravine was emptied between 1950 and 1952 for housing. As I said, it was not the Dodgers that bought the peoples homes and kicked them out, it was the City of Los Angeles and the Housing Authority that used federal tax dollars to buy out the homes by using eminent domain laws. In the late thirties the City of Los Angeles was looking for an area that would be used to build public housing. The L.A. city council considered Chavez Ravine a prime spot for this project. They wanted more housing on the land because the housing would generate more tax dollars for the city. The city planned the Elysian Park Heights public housing project which included two dozen 13-story buildings and more than 160 two-story townhouses. Before construction could begin, the local political climate changed in L. A. in 1953 and he project lost most of it's support. As I said, by the time the Dodgers finally moved to L. A., most of the residents of the ravine had already moved out, based on the promise from the city that public housing was going to be built in the area. But don't believe me. I have only lived in L.A. for 61 yrs and really don't know much about what goes on here. But this may help: http://articles.latimes.com/1997-04-20/opinion/op-50558_1_chavez-ravine
http://blog.freshjive.com/2011/04/for-the-love-of-baseball-the-battle-for-chavez-ravine/
Ah...the classic "affordable housing" dodge.
They claimed they had to evict the poor folks so they could build public housing, but the property became a ballpark instead.
Sound familiar San Diego?
Except the difference here is at the time there was no baseball team in Los Angeles.
Generally speaking, the reigning politicians in L.A., unlike San Diego, have been opposed to subsidies for pro sports facilities. (The proposed football stadium downtown would be an exception to that, because there would be at least one significant subsidy.) L.A. is broke, and I am not sure that a fat subsidy for a Dodgers ballpark and surrounding development could see the light of day. But you may be right. Best, Don Bauder
The $2.1 billion includes only $1.6 for the team itself. The other monies are$400 million to retire existing debt early, and $150 million as part of the deal for "property surrounding Dodger Stadium", ie parking lots.
"Only" $1.6 billion for the team itself? Best, Don Bauder
Well, the team was recently valued by Forbes at $1.4 billion, second to the Yankees $1.85 billion, so they did pay a little bit of a premium.
The majority of the San Diego City Council has received the majority of their campaign funds from developers.
These same developers controlled downtown redevelopment, milking the rest of the city to fatten themselves and enhance their power.
They're so entrenched, and have so many politicians in their pockets, that they will never give up their grip on other people's money. The redevelopment zombies will always want more, more, more...
I sincerely hope the State's financial gnomes reject all these alleged obligations together. The few worthy projects will find funding, and the rest deserve to be abandoned sooner rather than later.
You are so right, Fred. The state should reject all the claims. If some contractor can prove he had a contract in place long before the issue arose, he can go to court. Best, Don Bauder
Attorney General Kamala Harris should send warning letters to the CCDC Board Members advising them that they will be indicted on fraud charges if they attempt to back date contracts in order to create obligations. I am also concerned that there have been no layoffs at the CCDC. The headcount needs to be cut without delay, before the City starts having to fund CCDC salaries out of the general fund.
I agree 100%, Burwell. The AG should send out warning letters to every city that has tried to inflate artificially its list of contracts, supposedly backdating the contracts in the process. This is criminal activity. Someone doing this in the private sector, if caught, would spend time behind bars. Some of the criminal activity in Peregrine involved backdating orders that had come in after the quarter closed, so they could be reported in the prior quarter, thus pleasing Wall Street. You are also right about CCDC. Where are the layoffs? I suppose if the mayor wants CCDC to be in charge of real estate planning throughout the city, those jobs will remain and maybe even expand. Disgusting. Best, Don Bauder
link text
The Virtual Globetrotters put up images of Doug Manchester's Indian Wells estate. See link above. Papa Doug's certainly living high off the hog.
If Manchester actually paid $110 million for the Union-Tribune, double what it was worth, he certainly has access to money. I'm still not convinced he actually paid $110 million, although claims he did. Best, Don Bauder
A lot of money and underhanded dealings for phony form of entertainment.
In the days of the Roman Empire, the leaders scoffed that all the masses wanted was bread and circuses. San Diego is providing the circuses (massively subsidized pro football and baseball facilities for billionaire owners), but it is not providing the bread. The neighborhoods and the infrastructure are rotting while the establishment hogs all the money for downtown projects that should be financed with private capital. It's called corporate socialism -- privatization of the gain and socialization of the risk. But self-appointed conservatives stump for more, with the support of mainstream media.Best, Don Bauder
Don ( all in jest)
Were you in the bleachers or the vip box for the events back then?
My ancestors were in the V.I.P. boxes. Proof: "How many apples did you eat today, Caesar?" "Et tu, Brute." Best, Don Bauder
PLEASE write to your state senators immediately and oppose AB 1585 that they will vote on this week. It gives another 1.4 BILLION dollars to build affordable housing and we all know by affordable they mean market rate housing at huge profits. This while our state parks are closed. The developers claim its too harsh to cut off the funds cold turkey and they need to be eased into it so another 1.4 BILLION will help w/ the transition.
If affordable housing were really affordable, it would be one area of redevelopment that would be acceptable. However, it has turned into just another profit machine for developers. Best, Don Bauder
http://senate.ca.gov/senators Here are your state senators. please contact them IMMEDIATELY and oppose this massive giveaway.
Roll up your sleeves... Best, Don Bauder
BTW if anyone has any doubt about what a scam and waste of tax money affordable housing is look at this example. 1 CA affordable housing developer stoled a quarter of a BILLION dollars from tax payers and was only discovered because of a bitter ex wife. http://www.bestdefender.com/news/April11/28.html
Affordable housing isn't as a big a scam as subsidies for billionaire pro sports owners, hoteliers, auto dealers, retailers and the like. Best, Don Bauder
there is also another Bill in the Senate that will charge another tax on any new home purchase to "fund" affordable housing. they are tring to sneak it in.
Pols in Sacramento are trying to sneak many things in. Don't be surprised if redevelopment comes back in some form. Best, Don Bauder