When the California Supreme Court last Thursday upheld the abolishment of redevelopment agencies, it offered up a rare victory for conservative activists in the state, including Larry Gilbert of Mission Viejo.
Gilbert became a leading redevelopment opponent statewide starting about a dozen years ago when he exposed the myth about “blight” along the Crown Valley Parkway corridor in Mission Viejo. The City Council formed a redevelopment agency by designating as blighted Crown Valley and south Marguerite Parkways. Voters approved the agency in the years before conservative activists organized in the community.
The Mission Viejo Redevelopment Agency is one of the 400+ statewide that were abolished. The impact will flush itself out over the next months. Larry reviewed the development in a recent column.
In testimony at a redevelopment housing committee hearing of the California General Assembly, Gilbert documented Crown Valley Parkway as the commercial, medical and retail center of South Orange County, one of the most affluent regions in the nation.
His testimony and slide show helped to dispel the then-common assumption that redevelopment turned truly blighted areas into thriving retail and commercial centers. Actually, it mostly focused on successful areas like Crown Valley in wealth transfer, not building.
Larry Gilbert & Chris Norby
California redevelopment opponents, led by Chris Norby, now representing northeast Orange County in the General Assembly, went on to show that redevelopment merely allowed cities to siphon off big box retail from other cities (without any net gain in retail sales for any region). Redevelopment diverts property taxes from schools and counties (as well as city general funds) into the pocket of wealthy investors and retail corporations.
Mission Viejo a year or so later became California’s “Poster City” for redevelopment abuse when the City Council approved a $35 million bond issue to build two parking garages for the Mission Viejo mall, which the owner, Simon Properties, allowed to deteriorate instead of renovating the center on its own nickel. The City giveaway included a share of the mall’s retail sales tax receipts. The debt taken on by Mission Viejo taxpayers totaled $85 million, including interest and fees for lawyers, bond sellers, consultants and accountants who put together 600-plus pages of bureaucracy on the Crown Valley scheme.
Dan Walters, Sacramento Bee columnist and #1 media watchdog of state government, exposed the Mission Viejo tax windfall to the wealthiest mall owner in the nation. The garages are owned by Simon Properties, not the City which paid for them.
Redevelopment later suffered from nationwide public outrage over cities’ use of eminent domain to seize the properties of residents and mom and pop business owners in non-blighted areas. Cities then give the land to developers for private retail development, mostly always big box retail owned by large corporations.
Larry Gilbert also became a leading opponent on the national stage for fighting eminent domain abuse, with at least one trip to Washington D.C. and numerous published articles. For the record, eminent domain has not been used in Mission Viejo.
Allan Pilger
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{ 14 comments… read them below or add one }
It is time to ” Dance on the grave” of the abusive entity known as Redevelopment Agentcies in California. In truth they could be called the prototype example of “Reverse Robinhoodism” since they stole from the poor and gave to the rich.
For example in Mission Viejo one of the wealthy family car dealerships took large sums up front from this agency under a back loaded payment schedule that boggles the mind upon examination. It is indeed kind to call this a transfer of wealth. It was/is a great trick played on the community and the tax payers to provide “corporate welfare” for the already wealthy. These agencies were exempt from many of the basic requirements of government entities–example, competitive bidding. The designated attorney for our redevelopment agency is paid an amount from Mission Viejo that would make some industry executives jealous without the requisite risks and performance requirements.
It is well time to terminate a well intended effort that became arrogant and abusive.
Larry has always worked long and hard to make Mission Viejo a better place to live. My hat is off to Larry.
This furthers my belief that the south side of this city has always benefited no matter where the money comes from, and the north side is left to fend for itself. Once again a holiday went by and not one Christmas light was seen on the north side.
These guys are my heroes. Since elections are coming up it would be helpful if someone (hint hint) put up a chart with all our council members listed. The chart should show the different boondoggles and schemes and the council members who supported them. It should include costs and status if possible.
If a chart is not realistic then maybe a paragraph or two on specific issues over the last few terms of the council.
We’re all for Ernest Klein’s idea. We need to start now in preparation to the coming elections.
Great work Larry.
While I completely agree that there were terrible abuses in the use of redevelopment money, I think that we have unfortunately thrown out the baby with the bath water. RDAs were created to help economically troubled areas become revitalized and these programs have pulled many areas out of stagnation and into economic productivity. Unfortunately there are a number of small but extremely egregious situation where these powers were abused. I think that the outcome of this is less government waste but less opportunity to revive dying commercial centers.
With the Supreme Court decision, the judicial, legislative and executive branches of state government all agreed that redevelopment is a colossal failure.
In more than a half century it failed to cure urban decay, but put billions of tax dollars into the pockets of wealthy investors, developers, contractors, lawyers, bonds sellers and accounting firms.
Their lobbying dollars through the California Redevelopment Assn., and the League of California Cities use of political force and taxpayer dollars, kept redevelopment thriving. But the legislature finally wised up and began reeling in redevelopment during the past decade. Jerry Brown, who saw redevelopment up close while mayor of Oakland, made it a top priority to abolish redevelopment agencies as governor. He saw how it was draining billions of property taxes from the state, county and schools.
Re Geoff: While our neighbors are losing their homes to foreclosure is it a valid use of RDAs to give a billion in corporate welfare to high rollers for new football stadiums in SD and San Jose while at the same time we are about to cut school funding as we divert tax increment from schools, police and fire?
Last year our (Mission Viejo) city council majority voted to stay in the RDA game. As an attorney in this field surely Geoff agrees with me and the state law that redevelopment projects are established to eliminate (physical and economic) blight. Am I correct?
Prior to the court ruling, according to the state Housing and Community Development law, we could have provided assistance when the property owner lacks the resources to eradicate the blight on his or her own. Is that statement correct? Compared to MV is Simon Properties hurting financially? Would Geoff also agree that there is no “blight” along Crown Valley Parkway or Marguerite Parkway with its high end auto dealerships from Oso to our southern city boundary just south of Avery?
We are the poster child for RDA abuse in CA. For those outside of Mission Viejo I would ask you to view two You Tube’s that include a tour of the MV RDA project area referenced herein to see for yourselves if I am misleading the readers with my assessment. They are titled “Misson Viejo’s bogus redevelopment project area,” Part One and Part Two. We have a bogus declaration of blight that cannot be defended.
There is another aspect for these RDA project areas that is also considered. A lack of infrastructure. We renovated one and added a new parking structure at the Shops of MV and have widened Crown Valley Parkway with its gallery of art. Mission Hospital is investing around $400 million in their renovation and expansion right in the heart of this project zone.
Yes, Mission Viejo is blighted, NOT!
Redevelopment diverts property taxes for private use, mostly to boost commercial development which produce sales taxes.
If redevelopment was such a whopping success, wouldn’t sales tax bonanzas far overcompensate for property tax losses, if, as Geoff Willis seems to contend, a vast majority of redevelopment projects are successful? If so, why would all three branches of state government want to get rid of redevelopment?
True, Mission Viejo is the poster child for redevelopment abuse. But in my research one of the biggest victims would be the Antelope Valley, where Palmdale and Lancaster each rolled up north of a biillion dollars in debt as developers and their attorneys and consultants pitted one city against each other to attract big box retailers like Costco.
Most informed people know the Antelope Valley was destined for major residential growth as the middle class sought affordable single-family homes in the increasingly inflated Southern California housing market. Big box retail would have naturally followed with no property tax diversion into the pockets of developers and big-box retailers in a free market.
I am sure Larry has more update data, but I have a report showing in 2007 Lancaster accumulated $2.1 billion in redevelopment debt and Palmdale $1.6 billion as developers pitted city against city to put taxpayer dollars into their pockets. If you think these numbers are far-fetched, consider that the property and sales tax giveaways and subsequent taxpayer indebtedness for the Mission Viejo Mall alone totalled $85 million.
Like I said before: “RDA’s steal from the poor and give to the wealthy–Reverse Robinhoodism”. But I understand that the lawyers love it.
I could write a book about redevelopment abuses. Let me cite one example. Notice this issue called RDA relates to renovation and blight removal, not DEVELOPMENT.
In the City of Indian Wells their redevelepment agency built a 36 hole championship golf resort that I visited two years ago. In the summer of 2009 the median household income in CA was $59,000. At that same time the medium household income of Indian Wells was $128,000.
Included in any RDA project is the 20% of tax increment that must be set aside for affordable housing. From our research the city did not wish to build this CLASS of new housing in THEIR neighborhoods so they shifted the affordable housing funds/credit to an adjacent city which I think was Indio.
I was just in the Lucerne Valley last week (driving up the back way to Big Bear) and there was a huge shopping center in Apple Valley that was just about 3/4′s finish, but it looks like it will not be finished anytime soon; no store was occupied-no opening soon signs.RDA funded??
Congratulations to Larry for all his tireless efforts to end the redevelopment abuses that have existed with this flawed system for so long.
I could not speculate on whether the [Apple Valley] shopping center was a redevelopment project. There could be many factors involved in the depressed real estate market.