I could barely make out the words uttered from the man seated several rows behind me at Walnut City Hall.
“Corporate welfare,” I finally heard him say.
The two words were spoken just as Walnut City Councilman Tony Cartagena discussed a recent meeting with the Contract Cities Association on the topic of redevelopment.
The governor and the Legislature approved a measure wiping out all redevelopment agencies in the state. That means all 88 cities in Los Angeles County must end their redevelopment practices by Feb. 1 unless a bill by local state Sen. Ed Hernandez that gives cities until April gets approved.
Either way, the outcome is the same. Redevelopment will end. Period.
Redevelopment was an economic tool with which cities acting as redevelopment agencies would spur economic development by buy and put together parcels of land and sell them as a larger parcel to a developer, often at a discount. The development would benefit the city’s residents either directly or indirectly. A commercial shopping center would give residents more places to shop and often fill city coffers with sought-after sales-tax revenues to pay for services. This “tax increment” would flow to the redevelopment agency to invest in future projects, often low-cost and senior housing projects. Increment is the difference between the property tax value before improvements and after improvements. Counties and other agencies would bid for their share of the increment,
too, but a criticism has always been that school districts would lose out on their share of property tax increment.
There’s also some validity to the “corporate welfare” argument. Some cities would offer subsidies to, say, vastly rich Starbucks or Wal-Mart to put a store in. But I say that criticism is painting with a broad brush to vilify redevelopment when the guilty parties should have been exposed instead of the baby being thrown out with the bath water.
Cartagena said so Wednesday night.
“Instead, they should have gone after the ones that abused it,” he said.
Cartagena is correct. Walnut, a contract city, does not spend millions on its own police and fire departments that ring up high personnel (read: retirement pension) costs. It and others turned to redevelopment wisely to build public projects. They’d often save money for years to do so. It’s why Walnut is recognized as one of the best places to live in the country.
“Our senior center. The Walnut-Diamond Bar Sheriff’s Station. The library. Equestrian trails,” he said, going through a quick list, all financed through redevelopment funds.
When I was a cub reporter in the early 1980s, Ontario did a good job with redevelopment of Euclid Avenue, a main thoroughfare that needed a facelift. Later, I covered Fontana and it used redevelopment to lure the developer of Southridge, a mega tract-home development. The city’s explanation was empty land was “economically blighted.”
Rightfully so, the Legislature tightened up the law and ruled out “economical blight” as empty land. Later, Diamond Bar, an upper-middle class city, tried redevelopment of a shopping center and the case ended up in court. Again, the court said the city did not have enough blight for redevelopment.
So, yes, there have been abuses. There have been patches applied. But more importantly, we can point to the redevelopment success stories: Old Pasadena, Old Town Monrovia, Main Street in Alhambra (though in my view, still a work in progress), San Diego’s Gas Lamp District. And there are many smaller successes, such as affordable housing projects and restoration of historical buildings for reuse.
As Walnut Councilwoman Mary Su noted, the state is looking to create a new type of economic development tool for cities to use. All while cities hand out pink slips to redevelopment employees – a bad move in a struggling economy.
No, banning redevelopment was not about getting rid of corporate welfare. If it was, we’d have closed the loopholes in our country’s tax code that allows many corporations to pay zero taxes.
It was all about money. It was just a way for Sacramento to get its hands on more money to pay for social services and state pensions. So Gov. Brown hit up the oft-criticized redevelopment tool – a soft spot in local governments – to accomplish that goal.
I don’t believe schools will see a windfall. In fact, the state budget calls for more cuts to schools unless residents vote in a half-cent sales tax and approve higher taxes on wealthier Californians.
What I see is economic vitality fading in the San Gabriel Valley, where smaller cities need every tool they can get to re-make themselves. I hope they find a new way.
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