Cali Controller Announces Big Bust of Redevelopment Scams


On one coast the cops arrest 119 suspected organized criminals; on the other the state government announces a sweep of 18 redevelopment "scams." It's enough to make you believe in law and order.

California Controller John Chiang has announced an audit of redevelopment agencies (RDAs) around the state. In his announcement of the audit, Chiang says he's looking to figure out "whether RDAs are the engines of local economic and job growth or are simply scams providing windfalls to political cronies at the expense of public services."

As Kent Brockman put it: At the risk of editorializing, THEY'RE GUILTY! Chiang refers to the "anecdotal evidence" of the RDAs' terrible performance, and you can find some of those anecdotes here, here, here, here and here. Chiang again:

The 18 RDAs selected for the reviews represent urban, suburban and rural communities. They are geographically diverse and represent a mix of varying populations. The reviews will look at, among other things, how the RDAs define a "blighted" area, whether they are appropriately paying for low- and moderate-income housing as required by law, whether they are accurately "passing through" payments to schools within their community, and how much RDA officials, board members and employees are being compensated for their services.

Here's a list of the 18 targets—which includes the billion-dollar-disposing Community Redevelopment Agency of Los Angeles.

Meanwhile, Gov. Jerry Brown's plan to nix the RDAs from the state budget is causing a revolt in cities located, literally, from the mountains to the prairies to the oceans white with foam. City councils that have recently voted either to push forward redevelopment projects or oppose the governor's plan include Placerville, Fresno, Taft and San Diego. Fremont, San Jose and Los Angeles have gone further and tried to spirit away redevelopment funds before the state cuts them off.

Many RDA reactionaries are using the pseudo-reformist argument that Brown's plan will take money away from local communities and centralize it in Sacramento. In the Contra Costa Times, David Borenstein points out that local tyrants are just as wasteful as far-away tyrants:

While city officials claim the state is trying to raid their funds, it's actually the cities, using their redevelopment agencies, that have been siphoning billions of dollars from badly needed government services and spending the money on projects that often have little to do with cleaning up blight.

The redevelopment scam, which has turned into a windfall for developers, bond marketers, planning consultants and professional sports teams, has racked up $88 billion in public debt statewide—without voter approval. It should have been ended decades ago. Kudos to the governor for finally taking it on…

Communities like San Diego and Los Angeles have used the money to fund sports complexes, while Santa Clara is planning to do the same. In Hercules, millions of dollars of redevelopment funds went to consultants who have almost no construction to show for it, and to a company owned by the city manager's daughters that, among other things, provided mortgage loans for city employees and a member of the firm.

Indeed, an analysis released in September by a watchdog office of the state Senate found redevelopment agencies around the state that used their money primarily to pay salaries and administrative costs.

Across the Bay, the San Francisco Comical's Debra J. Saunders has a remarkably accurate observation about buildings funded by RDA money: They are "new, big and mostly empty."

Other redev hijinks: In one or more of the "here" links above I noted that the focus on the "new, big" part of the redevelopment equation almost always means years get wasted as government agencies and daydreaming developers plan massive mixed-use behemoths—in the manner of Rick Caruso's Grove—that are more elaborate than local demand can sustain. Read up on how mighty Caruso himself just swung a deal with the Glendale city council that gives two property owners 45 days to sell him their buildings near his Americana mall or face eminent domain condemnations. A councilwoman says Americana "has kind of become the 'it' place for the region." Has this person actually been to the mall?