California Lawmakers Continue to Undermine Property Rights

Urban renewal rears its ugly head again in the Golden State.

California’s 1940s-era urban-renewal policy, “redevelopment,” is coming back — only less so in some ways but more so in others.

California’s redevelopment law was designed to revive inner-city neighborhoods by giving city planners extra powers to invest tax dollars and direct development decisions in areas that were deemed to be blighted. It morphed into a financial sleight of hand, whereby officials subsidized auto malls and hotels to divert tax revenues that would go elsewhere.

Property-rights activists loathed redevelopment because it gave cities an excuse to take property via eminent domain and give it to developers who had “better” plans for the property. Anything eyed by these agencies, critics said, became “blight.”

Even many redevelopment supporters — who point to the revival of San Diego’s Gaslamp Quarter and other projects as proof of its success — admit that agencies sometimes abused their power. But in the end, their financial approach was their undoing.

In 2011, a state budget crisis that prompted the new governor to look for ways to fill a budget gap led to the end of redevelopment, given that agencies ended up grabbing about 12 percent of state property tax revenues. Sure enough, these agencies have dissolved and new successor agencies can’t start new projects, but can only pay off the debt on old ones.

Redevelopment’s advocates, including the developers, bond dealers, consultants and government planners involved in it, tried to revive redevelopment last year, but the governor vetoed the bills. They are back again, and SB 1 by Senate President Pro Tempore Darrell Steinberg, D-Sacramento, passed a key committee on Wednesday.
Called the “Sustainable Communities Investment Plan,” it’s basically the same process but with a new environmentally oriented twist.

In the old redevelopment, agencies targeted an area that was deemed “blighted” based on a wide range of mostly subjective factors. All new property tax revenues above the level when the project area was created, called “tax increment,” went to the agency, which floated bonds and subsidized developers.

The new redevelopment is pretty much the same thing except that instead of targeting urban blight it targets urban sprawl. Supporters believe that new developments should be built in existing urban areas to reduce global warming. Redevelopment redux is a mechanism for providing fiscal incentives to spark the construction of apartments, high rises and stadiums, with “blight” defined as anything that doesn’t fit the infill vision.

Marko Mlikotin, president of the Folsom-based California Alliance to Protect Private Property Rights, believes eminent domain could be more easily invoked under SB 1 than before given the broad blight definition.

From a financial perspective, however, SB 1 is a kinder-gentler approach. Before, city agencies could create project areas and unilaterally grab tax revenues that would have gone to counties, school districts and special districts. The state reimbursed the schools, which is why Brown put an end to it.

The new legislation requires the districts and cities to work together to create the project, so it can no longer be a mechanism for taking others’ revenue. That greatly reduces the incentive to create project areas and stems the money flow. For that reason, the state’s best-known anti-redevelopment crusader, former Assemblyman Chris Norby of Orange County, sees it as a far cry from the bad old days, even though he is opposed to redevelopment’s return. “Once Frankenstein is dead, it’s very hard to rebuild him,” he said.

Steinberg’s policy advisor on the issue, Steve Shea, reminded me that the new redevelopment will start the base year for calculating tax increment in 2014, so it will take many years before it can accumulate the kind of tax revenue that old redevelopment agencies had amassed. It is redevelopment on a much smaller scale, something he said is necessary to help ameliorate the higher costs of building projects in urban areas.

But like his boss, Steinberg, Shea strongly defended the use of eminent domain as an urban-planning tool. So it might not be long before Californians see some of the property-rights controversies that gave redevelopment a black eye, even if it takes years before the agencies become the fiscal sinkholes that led to their demise.

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  • Eduard van Haalen||

    Water is still wet?

    General Franco is still dead?

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  • anon||

    California’s redevelopment law was designed to revive inner-city neighborhoods by giving city planners extra powers to invest tax dollars and direct development decisions in areas that were deemed to be blighted.

    Gee, I wonder what possibly went wrong there.

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  • Dweebston||

    Lawmakers Continue to Undermine Property Rights

    I hear the sun rose in the east this morning, too, and Tony shilled for Obama. Some things are universal constants.

  • Dweebston||

    Sinkhole swallows copse of trees. Petroleum is a renewable resource!

  • anon||

    Dude, that was awesome. A bit unclear on what they were even doing there though and too lazy to watch those "public briefings."

  • dinkster||

    I don't follow. I saw the trees sink, it was wild.

  • ||

    "The new redevelopment is pretty much the same thing except that instead of targeting urban blight it targets urban sprawl. Supporters believe that new developments should be built in existing urban areas to reduce global warming."

    This was the aim of the global warming movement all along; to destroy property rights and remake the world in the progressive vision. Fuck warmistas.

  • FYTW||

    This is actually a little more sinister. It's less about saving Mother Gaia than it is about progressive antipathy for suburbs.

    You have to live here to really grasp the loathing that California liberals have for suburbia. To be sure they garb it in all kinds of high-sounding rhetoric about preventing sprawl and investing in "smart growth" and blah blah blah, but when you get right down to it what's twisting their frilly pink panties is the notion that someone might decide (for example) that downtown San Jose is a shitty place to raise a family, and instead of continuing to try to cram a wife and two kids into a 1000-square-foot two bedroom apartment or condo, will buy a detached home with a yard out in Morgan Hill and commute to work.

    The hate that for a couple of reasons. First, the real bastions of progressive political strength in this state are the big urban enclaves. To be sure there are plenty of registered Democrats living in the burbs, but the core constituencies of the progressive coalition are clustered in and around the cities. When taxpayers decamp from urban areas, that means less money for liberal pols to redistribute to those constituencies.

  • FYTW||

    (Stupid character limit.)

    Second, these assholes are cloistered and, thus, delusional. They live in upscale access-controlled communities where they never have to deal with the downsides of cramming more and more people into urban enclaves; accordingly, they cannot fathom why the promise of a walkable downtown with bike paths and choo-choo trains isn't the most attractive thing in the world to somebody with a growing family. They like the technocratic micromanagement of their lives and environments; they cannot understand why anybody would object to it, and so when someone does, they're obviously a wrecker who must be punished.

  • Finrod||

    And they never admit that their past plans have failed miserably and never had any chance of succeeding. Anything that went wrong before of course wouldn't happen again, because of course they'll get it all right and wonderful this time for sure!

    So they fuck up everything worse than it's ever been fucked up before, AGAIN.

  • AdamJ||

    The real unspoken goal of the enviros an green peace types is population control. They don't want you to have that family because people are evil.

    Funny thing about that is that we need an ever-growing population to feed the progressive ponzi entitlement state. These guys just can't make up thei mind can they!

  • Aresen||

    “Sustainable Communities Investment Plan,”

    Pure Orwell.

  • BakedPenguin||

    "Sustainable Living for Urban Minorities."

  • Nazdrakke||

    The progressive obsession with stasis is probably their creepiest trait.

  • ||

    Well, how are we supposed to make the world a better place if it keeps changing on us?

  • Gorilla tactics||

    the stasis is their "end point in history" when man finally has cognitive mastery over all the material world. All problems will be solved and utopia will have finally arrived.

    This vision is just, it is beautiful and all those who oppose it will be shot.

  • ||

    It would really suck to be eminent domained just because you live near a strip mall.

    The "environmentally friendly" twist basically means free reign to tear down low-density neighborhoods, blighted or not, and put in apartment blocks.

  • Dweebston||

    Nothing screams preservation and beautification like an apartment-dwelling class of blue-collar workers. I realize much of the slums problem has to do with rent controls and various bureaucratic artifice hobbling housing markets, but it can't help having an essentially disaffected pool of section 8 tenants from which to choose.

  • Gorilla tactics||

    yeah well the fallacy is the same:

    middle class people live in the suburbs, THEREFORE, putting people in the suburbs will magically turn them into middle class peeps.

    See! Voila!

    In other words the left is materialist in philosophical orientation; all issues can be solved with spending more money or more social engineering (OOPS! I MEAN'T "NUDGING"). What they never realize is that money is the end product of wealth that has already been created.

    The problem though is that the suburbs exist because people fled those crime ridden areas in the first place. Now they will bring the ghetto to them in the name of diversity.

  • Dweebston||

    Their worldview is founded on exploitation ideology and a ghoulish view of commerce as nothing but zero-sum transactions. Wealth isn't the soupçon of commercial cooperation, but a static and preexisting pool of resources hoarded by the wealthy at the expense of the poor.

    Theirs is a disease of willful naivety wedded to envy, paraded under an egalitarian banner. It's toxic.

  • R C Dean||

    The essential fallacy is their confusion of appearance with substance.

    College degrees/home ownership/whatever are all outward trappings of middle class people, therefore that must be the substance of being middle class. Ergo, giving people these trappings will make them middle class.

    Big surprise for the proggies: the causation arrow is pointing the other way. Again.

  • Gorilla tactics||

    Exactly,

    I think you worded it better than I did, the causation arrow thing is exactly what the issue is.

  • Finrod||

    "Wet streets cause rain."

  • SKR||

    obviously the bill is intentionally vague, but it basically defines any area with a density lower than 1 residential unit per 1/8th acre as blight

  • R C Dean||

    Under this definition, the very poshiest neighborhoods are all blighted.

    Yet somehow, mysteriously, the wealthy neighborhoods with the lowest density won't be targetted.

  • ||

    California policy is schizophrenic. They complain about the cost of housing, and they want to improve "blighted" areas, simultaneously. Guess what happens when you improve blighted areas? House prices go up.

    Can we please make a decision on whether or not we want abundant, low priced, affordable housing, or high priced, scarce housing in awesome neighborhoods? Do you want the value of everyone's home to go up, up, and up, or do you want housing to be affordable? Which is it? Listening to Californians, the answer always sounds like "all of the above". Sorry, but that's not how reality works: a single item can't get cheaper and more expensive simultaneously.

  • Bill Dalasio||

    "Sorry, but that's not how reality works: a single item can't get cheaper and more expensive simultaneously."

    But that's not FAAAAIIIRRRRR!!!1!

  • Dweebston||

    Liberals don't make consessions to reality. There's nothing contradictory about competing special interests, to their worldview. There's only market failure, even if it's policy-driven market failure.

  • Gorilla tactics||

    tru dat

    but "market failures" are a myth, it's kinda like saying gravity "failed" because you fell and broke your leg. Markets can produce outcomes that are bad for some people, but its not a failure really.

  • ||

    True.

    I once watched a professor give a lecture about examples of market failure. Practically every example starts off with, "OK, let's assume public property that no one owns."

    Uh.....I think we found a problem.

  • Gorilla tactics||

    Did he teach you Keynes?

  • Tonio||

    Can we please make a decision on whether or not we want abundant, low priced, affordable housing, or high priced, scarce housing in awesome neighborhoods?

    Why, no, we can't. Because the whole point of economic liberty is that there is no top-down planning. People are free to buy land and build the housing they want.

  • R C Dean||

    The problem there is the "we". Some of the people jammed under that umbrella want affordable housing, and some want pricey housing in trendy neighborhoods.

    So, no, "we" can't make a single decision.

  • Gorilla tactics||

    Im not from Cali, but from what I heard, doesn't take like almost a fucking decade of regulatory hoop jumping and legal shit just to build an extension on your house? open space laws, environmental impact studies, zoning etc etc the prices are high because people can't build anything-it's amazing how progtards dont even understand basic supply and demand works: more regulations means supply can't meet demand, therefore prices go up-they can't even grasp this very basic concept.

  • Gorilla tactics||

    "California policy is schizophrenic. They complain about the cost of housing, and they want to improve "blighted" areas, simultaneously. Guess what happens when you improve blighted areas? House prices go up."

    It's not schizophrenia, it's cognitive dissonance. The left believes they can "legislate the market", the problem is that you can't. They don't absorb whatever contradicts their view, or they can't string these different seemingly contradictory pieces of reality together...so, uh, RACIST!

  • Anonymous Coward||

    But like his boss, Steinberg, Shea strongly defended the use of eminent domain as an urban-planning tool.

    Out of that hut, peasant! The lord of manor has plans to turn your land into a windmill! Thank his lordship for not slitting your throat, raping your wife, and stabbing your dog!

    You have until sundown to be off the property.

  • Death Rock and Skull||

    "California’s redevelopment law was designed to revive inner-city neighborhoods by giving city planners extra powers to invest tax dollars and direct development decisions in areas that were deemed to be blighted. It morphed into a financial sleight of hand"

    It morphed? Those powers were unethical in the first place.

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