Eminent Domain

Redevelopers to Jerry Brown: Let There Be Blight

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Some fine constituent service from Ridley-Thomas.

California Gov. Jerry Brown's long-shot plan to eliminate the state's redevelopment agencies has already provided one benefit to the public: It has revealed the essentially crooked and criminal nature of the RDAs.

On Monday the city government of Fremont voted to lock in $121 million in redevelopment funds before the state budget gets approved. San Jose is also trying to pocket $58 million in redevelopment funds.

And last week the Community Redevelopment Agency of Los Angeles (CRA/LA) responded to Brown's proposal—which is expected to realize between $5 billion and $6 billion in savings for the state and local governments—by trying to thwart it in a meeting that was called in violation of state law and may have resulted in an illegal business deal.

Ron Kaye has the full video of the CRA/LA meeting, which features a reliably unhinged performance from plaid-suited gadfly John Walsh:

California law requires 72 hours' notice of public meetings, specifically to prevent public agencies from doing what the CRA/LA did at this meeting, which was called with less than 24 hours' notice and ended in a transfer of about a billion dollars in funding to the city of L.A. and the creation of a new city-run non-profit that will maintain the agency's existing projects and hire its existing staff.

That non-profit deal has an even more dubious legal basis. In private business an attempt to transfer assets in this way would most likely be considered a fraudulent conveyance under civil law. While fraudulent conveyance does not necessarily require malice aforethought, in this case the CRA's action is also in violation of the governor's clear intent.

Of course, the budget has not been approved yet, and it's probable that the final budget will not include the redevelopment cuts because—although redevelopment agencies are wildly unpopular among those citizens unfortunate enough to know about them—they have broad support among Democratic legislators.

As is often the case, support among the Democrats also means support among the mainstream media. Dig the L.A. Times trying to claim the change will hurt California businesses. Even more hilariously, check out the Sacramento Bee lamenting how the cuts will "destroy a business that's vital to California's economic recovery," one that the Bee claims helped revive the capital city's downtown and entertainment centers (a surprising description for anybody who has encountered Sacto's unpeopled downtown and rolled-up-sidewalk nightlife).

The CRA/LA showcases the result of two decades of dealmaking.

Whether or not the deals in L.A., Fremont and San Jose are allowed to stand, and whether redevelopment agencies survive, one thing is not in doubt: Redevelopment is a complete failure. Savor the vacant lots on a project the CRA/LA has been in charge of for 19 years. Read about how the CRA forced out a successful business in order to replace it with nothing. And allow me to repeat myself by describing the mechanism by which redevelopment manages to create urban prairie:

In at least two of these cases, the developer screwed up the deal in part by planning much larger-scale projects than the local market could sustain. As a result, large parcels of land that could support modest commercial and residential buildings lie fallow, while a rogues gallery of community activists, government flunkies, gadflies, absentee landlords with bickering family members, architects, labor leaders, public policy majors and reverends gather every fiscal quarter or so to debate projects that never pencil out. (I have not looked closely into the third case: the Broadway/Manchester project currently led by developer AMCAL Multi-Housing, where "'affordable' never means less." But I see the CRA's most recent Broadway/Manchester report [pdf] has the developer "applying for Prop 1C funds for estimated project gap.")

Brown is pushing back against the sordid backstairs intrigue of the CRA/LA, and in his budget he cites a Legislative Analyst's Office finding that "there is no reliable evidence that redevelopment projects attract business to the state or increase overall economic development in California." He's right to keep fighting. For all the opposition from the media and the bureaucracies, eliminating redevelopment is both a political winner and the right thing to do. It would please the public, save billions of dollars and remove a bunch of thugs who prey on the poorest neighborhoods in the state. Go, Jerry, go!