Property Rights

The Well-Deserved Death of California's Redevelopment Scam

A big win for property rights in the Golden State.

|

The California Redevelopment Association's Web site is still up and running and still features job postings for redevelopment jobs, although the site does report that the association's annual convention and expo has been cancelled. It's just a matter of time before the news reaches the CRA web-master that redevelopment in California is dead. There is weeping and gnashing of teeth in redevelopment circles, but other Californians should rejoice.

After many political battles and court fights, it's over as of last Wednesday. These heavy-handed and arrogant agencies, which dispensed corporate welfare and abused eminent domain, are kaput. The new successor agencies will merely pay off the debt the agencies had irresponsibly accumulated, but there will be no more projects. Efforts to delay the execution and recreate new agencies went nowhere.

Gov. Jerry Brown's decision to kill redevelopment—and his ability to keep redevelopment-loving Democratic legislators on board the plan to the bitter end—will perhaps be his best legacy. It makes the many bad things he is doing (tax increases, rail subsidies, protection of union excesses, etc.) nearly tolerable.

This is a sweet reminder to those who have battled in the trenches for a good cause that once in a while it's possible to win. In the many years I wrote about redevelopment and the sad tales of people being driven off their property, of the misuse of public funds and absurd subsidies to the corporate welfare crowd, I never envisioned a scenario in which redevelopment would end. And I would have laughed out loud had someone suggested that a Democratic governor, with Democratic legislative support would have put RDAs in their well-deserved grave.

Political change rarely happens in ways that we expect. That's a reminder to remain optimistic (Note to self: Stop being such a nattering nabob). Change rarely follows any blueprint. Here's a case where a broad coalition of anti-redevelopment activists stuck to the moral high ground and eventually we witnessed a seismic shift in thinking and policy. Perhaps it was only a matter of time before the unsustainability of redevelopment became clear. How long could tax increment gobble up more and more of the budget before anyone noticed?

In justifying their opposition to the governor's plan, many Republicans insisted that redevelopment would never really end. That's a reminder that it's sometimes worth being a little less cynical.

This is California, so the end of redevelopment does not mean the rebirth of common sense or fiscal sanity. Surely, bad things will be proposed to fill redevelopment's void, but it's much easier fighting the rebirth of these agencies than trying to kill existing agencies. The money source is going away. RDA funds will go to new constituencies, who will immediately have vested interests in protecting those streams.

Some defenders of redevelopment have said: "The money will now just go to public sector unions and prop up other forms of wasteful spending." There's obviously much truth to that given that virtually every dime the government spends is wasted. My readers surely know that I am no fan of public sector unions. But it's much more sensible to spend money on legitimate public services than on corporate subsidies. Redevelopment agencies are abusive, so shutting them down will help protect property rights. Cities can still abuse eminent domain, but without the funding source they won't bother as often. And the public-sector pay and pension issue is unsustainable also—it's a matter of time before cities rein in these costs. Redevelopment let cities delay dealing with the problem by encouraging them to seek out new tax revenues by subsidizing sales-tax-generating redevelopment projects.

Legislators are now trying desperately to save "affordable housing." Twenty percent of redevelopment funds were earmarked toward these subsidized housing projects and the affordable-housing industry and liberal politicians in particular are complaining that the poor will no longer have a place to live. Senate President Pro Tem Darrell Steinberg (D-Sacramento), introduced legislation recently that would let cities keep those low-income housing dollars from RDAs, but it failed to get enough votes to implement this before 2013, according to the Sacramento Bee.

It would be nice if legislators understood economics. (I know, dream on!) The end of affordable housing subsidies is bad for those organizations that rely on government funds to build these units, some of whom portrayed dire scenarios to reporters. But a reduction in subsidized housing funds will not harm the poor.

First, redevelopment agencies often squander affordable housing dollars because the locals don't like to have low-income housing built in their middle-class neighborhoods. So RDAs would often use the money for projects for the elderly. Second, affordable housing doesn't necessarily increase the actual number of units that are affordable to poor people. I wrote about one project years ago in Anaheim where the city wanted to knock down a privately owned apartment complex and put up a government-run project that would have housed far fewer people. Third, the government does a terrible job building these projects. It overpays government-approved contractors and at times will spend hundreds of thousands of dollars per unit—far more than the private sector would spend. The projects end up being make-work projects for union contractors and subsidized developers.

Affordable housing advocates believe that poor people should be housed in brand new apartments or houses, which is silly. Thanks to the housing bust, there's more affordable housing available than ever. The market does a great job providing homes and apartments. Government "affordable housing" breeds dependency, as people who live in below-market houses lose any incentive to ever move out of those subsidized places.

This is a troubling vestige of the redevelopment process. But it's still worth raising a glass of champagne and celebrating the end of redevelopment as we gear up for new political battles.

Steven Greenhut is the editor of CalWatchDog.com.

NEXT: Behind the Music

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. California: it’s like the beautiful drug addict/drunk in America’s family.

  2. THANK JESUS

    Also, First

    1. Sorry, NOT FIRST

  3. RIP, POS RDA.

  4. I had the opportunity to get “close” to the CRA and one of its projects. I was hired as consultant with deep knowledge of the targeted community which had requested help. The rate was LESS than my usual modest rate and paid only by the hour, and with the expectation to be available whereever whenever but sorry, no retainer. So sadly I was not a beneficiary of the corporate largess of which you speak. However I can say this: they’re method of impact study and engagement (which already seemed a waste–we’d had YEARS understanding what that community needed) was the biggest circular clusterf*** I’ve had the pleasure of witnessing. I don’t necessarily attribute the stupid wastefulness to the CRA. I find it’s the case with all government departments. The project was halted with the de-funding of the CRA and I’m also happy to say good riddance. Don’t get me wrong I LIKE redevelopment and think there are some parts of LA that need it desperately. Sometimes an “authority” can get more consensus than where there is a bunch of bickering factions. But that CRA process I was involved in did feel like a total waste of taxpayer money, and the “spend or lose it” ethos of the agency was revolting to me. (Again, common to all government agencies.)

    1. Don’t get me wrong I LIKE redevelopment and think there are some parts of LA that need it desperately.

      Know what helps communities a lot?

      Leaving them the fuck alone.

      1. I should’ve said IMPROVEMENT. I believe there are areas where fixing of broken windows and scrubbing of sidewalks would do a mile of mental good. I do not mean tearing down people’s homes to build some other people’s homes.

        The project I was involved in was (a) at the INVITATION of the community, and (b) involved NO eminent domain. It was a study of options to improve traffic flow, sewage, building codes, and streetscaping. However the biggest problem of this commercial/industrial community was business flight to other states and countries, so actually there was little in the CRA’s arsenal that would’ve fixed these problems anyway. That was the saddest part for me to watch: The community finally gets the city’s attention (because you know, big papa government will surely fix things!) and they (the CRA–which invested ridiculous dollars to “address the issues”) could only operate in the arena of urban development, greenscapes and public art. Nice, but pointless in solving the underlying issues. There was nothing about addressing the regulations and taxation that drove away the business in the first place, nor the collective industry marketing those other cities were doing to attract those businesses. Obviously the CRA was the wrong answer to this community’s problem, but gosh darn everybody just looved the idea of that landmark gateway.

        Like I said: good riddance.

    2. Sometimes an “authority” can get more consensus than where there is a bunch of bickering factions.

      The best “authority” for how a piece of land should be developed is the private, rightful owner of the land. No bickering factions, just one person who owns the property and develops it the best way to suit his needs.

      1. Totally agree.

        I think my experience with the CRA, which did not involve eminent domain and was planning to address common urban development issues in the area, may have been an exception to everyone else’s experience with the CRA or expectation about what they do/did.

    3. Sometimes an “authority” can get more consensus than where there is a bunch of bickering factions.

      When a faction gets the upper hand, it becomes an “authority.”
      Madison:
      “When a majority is included in a faction, the form of popular government, on the other hand, enables it to sacrifice to its ruling passion or interest both the public good and the rights of other citizens. To secure the public good and private rights against the danger of such a faction, and at the same time to preserve the spirit and the form of popular government, is then the great object to which our inquiries are directed.”

      1. An independent authority in which all factions have a vested interest CAN help moderate the process to get to an outcome. That’s the point, right? To avoid the tyranny of the majority.

        “….[it] is then the great object to which our inquiries are directed.”

        This community WANTED change they just couldn’t agree on what/how to get there. They thought it time to engage “elected officials” in the conversation to help build consensus.

  5. Oh, the *whining* in SF and Oakland! Hard to believe where this money was being spent and the job-titles associated with it.

  6. I’m still trying to figure out how the hippie became governor again. Did I fall asleep for 30 years?

Please to post comments

Comments are closed.