City Hall handouts revisited



As the state budget is on the front burner, with the GOP virtually united in the last piece of the puzzle, shutting down our over 400 redevelopment agencies,  I thought it appropriate to share part of an OC Register editorial penned by Steve Greenhut that was published on Jan 28, 1999.  The headline reads:

City Hall handouts.

Steve begins stating “there is a crucial, yet often overlooked distinction between government policies that are favorable to business in general and those that favor some businesses in particular.”
In this editorial Steve refers to Kosmont & Associates “doing business survey “.
He points out “there’s a world of difference, however, between cities wise enough to keep business fees and manufacturing taxes low to encourage new business development, and those that divert public funds to private companies in the name of redevelopment.
The first approach benefits any and all businesses, the second redistributes income from taxpayers to those businesses favored by politicians and city managers.”  He later adds “clearly corporate welfare has gone mainstream.”
The editorial includes three redevelopment projects in Mission Viejo from our investing “$1.3 million to lure a minor league baseball team, which has since been sold and moving to Yuma, Arizona” renovation of our Mall parking structure and a disaster called Kaleidospcope on Crown Valley Parkway and the freeway.
“Claiming that Mission Viejo needed wholesome family entertainment, the city council  had announced plans in 1996 to spend $5 million to build a new stadium, $1 million to renovate a stadium at  Saddleback College for temporary use until the new park was built, and $150,000 in fees to help the franchise relocate from Long Beach.
He goes on to point out that “the city also recently committed $85 million in total indebtedness to subsidize the upscale renovation of a local mall, and has announced plans for a $2 million subsidy to the developer of an entertainment complex.”
But as the Kosmont survey makes clear, Mission Viejo is hardly unique. As Mission Viejo City Manager Dan Joseph told us, “fault the law, but don’t fault cities” for taking advantage of it.
Redevelopment laws certainly deserve more scrutiny. But reform is likely to come only after more Californians hold accountable those officials who create a pro-business climate by offering bald-faced corporate welfare and not just minimum taxes and regulations.”
What Dan Joseph stated is very revealing. He acknowledged that while our city is not blighted in the true definition of blight, unless we do something to change the law city managers across the state will continue to abuse their redevelopment agency powers.
Gilbert notes.
Eventually we will will discover what the governor is using to reward the Democrats for their votes to kill our states 400 plus redevelopment agencies. Most of us are not permitted into the back room where deals are being cut as my fingers hit these keys.
When I testified before Tom Torlakson on behalf of Tom McClintock (AB1677) in April of 1998, pointing out the abuses of our city, I was asked a simple question. When was your RDA initiated? One year prior to AB 1290 Eisenberg. Even Legislative Advocate Kenneth Emanuels, who represented the opposition, told me that Mission Viejo could not have engaged in this redevelopment projects if the agency was created today (1998).
As the Mission Viejo Mall Bonds carry a variable interest rate the total indebtedness is much lower than originally anticipated. The new parking structure, that our redevelopment agency funded, was under construction for several months before the city council/redevelopment agency, voted to approve that project’s bonds.
The 220,000 square foot Kaleidososcope project, that was not included by Huell Howser in his series of successful redevelopment projects, originally cost Samsung Pacific around $55-60 million dollars. It was sold for $28 million in 1991 and had another fire sale for $22 million. It is reported to have a 38% vacancy last year. Our $2 million investment, that was to be repaid upon conclusion of the first sale, never materialized.
Readers/taxpayers. Keep your eyes on SB 214(Wolk) Infrastructure Financing Districts.
“Today, forming an IFD is a cumbersome and unattractive option compared to a Redevelopment Agency RDA. Only one IFD has been formed since the law’s inception. IFD and RDA project areas can’t overlap.”

About Larry Gilbert