Editor’s Note: The City Council on Tuesday voted unanimously (Huizar absent) to join the mayor in fighting the governor’s plan to abolish CRAs and Enterprise Zones, effectively opposing his solutions to the state’s budget crisis and setting the stage for more of the same political machinations that have jeopardized the future of the city and state. Here’s a breakdown of the governor’s budget proposals from Valley Assemblyman Bob Blumenfield, Budget Committee chair (GovernorsBudgetProposal.pdf).
Gov. Jerry Brown set off howls across the state with his assault Monday on Community Redevelopment Agencies and Enterprise Zones — the instruments that have so long been abused by local politicians to enrich developers by robbing the public of good schools and quality services.
Our own Mayor Antonio Villaraigosa said Brown’s proposal to “completely eliminate the Redevelopment Zones and State Enterprise Zones is a non-starter.”
Added Christine Essel, CEO of CRA/LA: “Governor Brown is proposing to dismantle an economic tool that has a 60-year track record of success in creating jobs and stimulating economic activity across the state.”
That should be easy to test:
Are luxury hotels, luxury entertainment projects and luxury skyscrapers more valuable in economic and quality of life terms than cops on the streets and libraries that are open and programs in the parks for kids”
Does it help the working poor struggling for a better life in Boyle Heights to fill their neighborhood with housing for the city’s derelicts, mentally disturbed and hopelessly poor?
Understand how it works: The CRA takes over huge areas of the city and subsidizes development and then keeps the incremental increases in property taxes, often using eminent domain power to seize private property which it gives as a gift to private developers to build projects nobody wants except the people who profit from them.
This is no small matter, amounting to $226 million a year – almost enough to get the city back on track to financial solvency.
The CRA isn’t cheap to run either, with a payroll of $27 million a year plus $15 million for benefits and $10 million for office and administrative expense — a total of $50 million a year.
Who needs it?
Long-time LA Times City Hall reporter Bill Boyarsky, who crusaded with Councilman Joel Wachs against the original outlandish giveaway to AEG for Staples Center, dismisses redevelopment as a “huge boondoggle,” saying the agencies “suck money from the schools for the benefit of land developers.”
“Let redevelopment beneficiaries like billionaire Phillip Anschutz, who owns downtown’s LA Live and Staples Center, finance their own projects. If we end the subsidies, we can put the money to better use–the schools.”
With more than $5 billion a year at stake, the governor faces a fierce fight from the vested interests that thrive on redevelopment, including the politicians who use CRA projects to raise vast fortunes for their campaigns and bureaucrats like Essel who live so well on their huge salaries.
Brown noted at his press conference Monday that in Oakland where he was mayor Jack London Square was
redeveloped without the use of CRA or Enterprise Zone monies..
“Redevelopment takes money from schools,
cities, and counties … what we’re doing here is spending money at
the local level that the state doesn’t have. So we want to take that
money and leave it at the local level for the purposes that it was
historically intended. That’s police or fire or local activities,
county, or schools,” Brown said.
“Enterprise zones, again, these are all–they have their good points–but
it is almost a billion dollars, and overall they don’t add to the
general economy of the state. They move money around. And I know both
these things in Oakland were helpful, but I can tell you this: that if
the local government cleans up their regulatory underbrush–really goes
out and helps people develop and overcomes a lot of the NIMBY-ism–that
you can do economic development in a very solid way.”
Imagine that: If projects had to stand on their own feet financially and the approval process was done in the open instead of the darkness provided by the CRA, and the community was fully involved, we would have a healthier economy.
Business would flourish because we would have good schools and paved streets and services that made our communities healthy and our people prosperous.
It’s not as easy as that. But don’t kid yourself, the CRA does more harm than good and abolition is a step, a big step, in the right direction.
DO IT JERRY BROWN. CUT CRA BECAUSE ITS NOTHING BUT A CASH COW TO MAYOR AND COUNCIL. DO IT DO IT!!!
Call Brown to do it
916) 445-2841
Read how the Mayor always threatens like a child if he doesn’t get his way.
Villaraigosa told council members in his letter Monday that he would pursue layoffs himself if the deal to lease the nine garages was abandoned. Santana warned last week that dropping the parking proposal would prompt him to recommend an end to police hiring.
Kudos to Jerry Brown for going after CRA money. In order to put our fiscal house back in order and make the path of money transparent, CRAs have to go.
Now, it is incumbent on people from both political parties to give him the kind of support that will carry this. The mayor is screaming like a wounded banshee. Reaction that is good enough in my book to warrant all out support of Brown’s position.
If the Cesspool on Vine (1601 North Vine) is an example of what the CRA is doing, it deserves to be closed. And all the overhead is obscene.
If the Cesspool on Vine (1601 North Vine) is an example of what the CRA is doing, it deserves to be closed. And all the overhead is obscene.
I just called the Governor’s office and told him “Abolish the CRA.”
Don’t forget that just a few months back, our Mayor and CRA tried to kielo our whole city. CRA=s Corruption. No wonder the Mayor is crying. It is the best thing to come out of Brown’s budget. Abolish CRA.
Fast-Track California’s economic recovery by abolsihing the Trickle-Down Economics, Corporate Welfare, Property Tax Stealing, CRA Scheme.
You accomblish many things by cutting out the supply of working class taxpayer dollars to wealthy corporations.
You will have more money for schools, hospitals, and other vital services.
Then we can launch an FBI investigation of the corrupt activities in Los Angeles such as the use of Federal (HUD funds) and State/County Funds (CRA) for improper purposes, CRA coverups, Parking Lot giveaways, etc, etc.
If Governor Brown pulls this off, he should be Time Magazines Man of the decade!
But watch out for the powers/beneficiarys of CRA funds – They will try to quash this in 2 minutes.
Our Mayor and the wannabe Mayor Garcetti, big beneficiary of CRA-Hollywood will lead the pack in killing this aspect of Brown’s budget. Hope Brown gets our message and our strong sentiments against this corruption laden CRA.
Just read your Editor’s note, and I’m not surprised that the Council would back the Mayor in fighting the governor’s plan to abolish CRA & the Enterprise zones. If there is one issue that will galvanize the citizens in LA, we’ve found it. It benefits only the wealthy developers and the politicians and no spin by them will change the reality.
Perish the thought the interests of developers should come before those of the public. If Jerry Brown isn’t afraid of upsetting the status quo, and actually succeeds in this attempt to eliminate the CRA, then we have hope for this state.
This is a good test for things to come…
I respectfully disagree with your opinion regarding redevelopment. If the Governor is successful in terminating redevelopment agencies, you can kiss economic development goodbye in the State of California.
During the administration of Dick Mitchell, I was proud to serve in project management positions on the Hoover project, which allowed USC to expand by 50 acres toward Vermont, the Normandie Residential rehabilitation project and Bunker Hill. Daily, I witnessed the positive effects of redevelopment. Blighted neighborhoods gave way to new development, the tax base increased, construction and permanent jobs were created and affordable housing was developed.
Have there been abuses of the redevelopment law? You bet and the City is a poster child for these abuses. If these few bad apples are the standard for elimination of an activity in California, then you and I could come up with a very long list, starting with our own City of the Angeles.
It is overly simplistic and naive to state that the choice is “either or.” If there was not the positive results of redevelopment, there would not be the tax dollars available for the school district or anything. What existed on the land of LA Live? Parking lots and run down buildings that produced a very low tax base.
Throughout our state, there exemplary examples of the positive results of redevelopment, including:
Pasadena: Paseo Colorado, Old Town, Parsons and Avery headquarters
Santa Monica: Santa Monica Place, Sea Colony
San Diego: Horton Plaza, the Gaslamp District, Petco Park, the hotels and convention center and over 70,000 housing units
San Francisco: Embarcadero Plaza, the Ferry Building and much of the waterfront
San Jose: Most of the downtown encompasses a redevelopment project area
In NYC, Times Square was cleaned up and redeveloped using the powers of redevelopment, as was the World Trade Center and Battery Park. Likewise, in Boston, Jim Rouse brought Faneuil Hall alive using the powers of redevelopment. Without the powers of redevelopment, how would you propose that the 42 peep shows in Time Square would have been closed? Do you truly believe that the school districts would rather have money from the old Times Square or the redeveloped Times Square? The tax increment from Bunker Hill provided the local share for the Watts, USC/Hoover, Little Tokyo, Normandie and San Pedro projects. Besides helping to revitalize downtown Los Angeles, the Bunker Hill made it possible for revitalization to take place in these other diverse neighborhoods in Los Angeles.
If you look statewide, you would find that in 2006-2007, the following:
1. Redevelopment activities in California generated $40.8 billion in economic activity such as the generation of goods and services;
2. ˜ Redevelopment supported nearly 304,000 new full- and part-time jobs in just one year (2006-2007); ˜
3. For every $1 of redevelopment agency spending generated nearly $13 in total economic activity (goods and
services) in one year;
4. In 2003, redevelopment agency construction activities helped generate more than $2 billion in additional state and local revenues.
Redevelopment plays a critical role in providing housing affordable for working families, low income seniors, and disabled individuals. Since 1995 redevelopment agencies have helped build and/or rehabilitate 78,750 affordable housing units, according to the California Department of Housing and Community Development.
School districts receive a portion of the redevelopment-induced property tax increase the same way that other jurisdictions do. Additionally, existing school funding formulas set under state law require the state to backfill (or replace) property tax revenue that is sent to the redevelopment agency to repay debt. Thus, schools are generally unaffected by redevelopment financing.
I sit on the board of the Community Corporation of Santa Monica, one of the largest non-profit affordable housing developer in the region. We have developed over 2,200 units of affordable housing. Where did the money come to support this activity? Redevelopment. Under State law, redevelopment agencies are required to set aside 20% of their tax increment for affordable housing. Without this money we would have very little affordable housing built in our state.
If Governor Brown was successful with his plan, who would take over the real property, that the LA CRA owns? The “real estate departmen”t of the City of Los Angeles? The CRA is the only entity responsible for real estate in the City of Los Angeles. Create a caretaker agency? What does that accomplish? Who will be responsible for the legal obligations and the bonds that are now predicated on future redevelopment? You cannot just pull the plug on an activity that has been operating in the state for 60 years without creating legal and financial ramifications.
Are you holding Bill Boyarsky up as a credible “expert” on redevelopment because he quoted, by his own admission a “gadfly?” When Ray Hebert was the urban affairs writer for the Los Angeles Times, I was impressed by the responsibility he accepted for the position he held. He was so diligent in gathering his facts and his articles were based solely upon facts, not his personal opinions. I wish others who have the power of the media took the same approach as Ray and stated the facts, rather than their oft handed opinions.
@Michael P. Russell on January 11, 2011 7:05 PM
What you failed to point out is that Redevelopment funds are derived from Property Taxes – the Tax Increment that assumes that all increases in property valuation since the date of a Redevelopment area being established is solely the cause of Redevelopment area which was absurd during the speculative real estate boom during the 10 years from 1998 to 2008.
A case example was the W-Hotel project in which all 4-sides surrounding the W were being development without any Redevelopment funds during the time the City was trying to get that through:
Entitlements for the Clarret project (owned by the Nederlanders/Pantages Theater) were being sought at the same time with a voluntary 10% affordable housing and no subsidies. [This project was delayed by Garcetti as documented in the LA Business Journal] The Broadway Lofts and Lofts at Hollywood and Vine, the Redbury @ Hollywood.
So when politicians claim they leveraged hundreds of millions with a few million, they make a fatal assumption about a project that is performed without a dime of taxpayer subsidies.
But Redevelopment Agencies get the following primary powers:
1. The ability to issue debt without voter approval.
2. The power of eminent domain to condemn a smaller private property owner to hand it off to a larger preferred developer who may not even own the land. In many cases CRA such as Glendale give the property to the developer as they did with Rick Caruso at the Americana Brand.
3. The ability to take tax increment funds.
When a Redevelopment Area is established, all individual properties are considered blighted and are available for a taking even if they are brand knew. As the CRA/LA reminded us, they do not need to make any findings of blight for individual parcels within the redevelopment area.
The claims of jobs and leveraging public-private investment is very suspect and a dramatic example of that is the Hollywood-Highland Project (home of the Kodak Theater) in which Trazec-Hahn built the project for $620 Million and had to sell it to CIM Group for about $200 Million. Of course CIM immediately was granted a reduction in property taxes and Trizec-Hahn appealed and won relief from previous taxes it paid.
Who loses on these projects? The working class taxpayers who foot the bill and those vital services such as education and health that are robbed of tax monies by Redevelopment agencies.
And CRA project areas can live on for a lifetime. Just look at Bunker Hill which is still in place and established in 1959.
Some of the Cities/areas that you cited such as San Jose are also examples of problems with redevelopment. Just look at the indeptness of San Jose because of redevelopment and use “find” within the adobe document, Redevelopment, the Unknown Government: http://www.missionviejoca.org/pdfs/rug_2004.pdf
When we shake our heads at government bailouts of large financial firms “too big to fail” we have to look at Glendale and the Americana Brand. Why did Caruso whose personal wealth was estimated to be $1.9 Billion need to be given free land and other subsidies. Now our Billionaire Republican “hero” is running to the Glendale Redevelopment agency to condemn a small business owner of the Golden Key Hotel.
Because of this threat, existing small business within a redevelopment area are concerned about long-term investments in their buildings because of this threat of being taken out for a larger, wealthier and politically connected developer such as Caruso: http://www.laweekly.com/2010-12-30/news/rick-caruso-s-greedy-land-grab/
Proposition 13 isn’t the problem redevelopment agencies are the problem.
Image that! A pretend democrat(Jerry Brown) that is really a republican. And, a pretend republican (Arnold) that was really a democrat. What is this world coming to?
Looks like Jerry Brown will be able to accomplish what Arnold couldn’t just because of the party they say they represent.
What a shocker! Hopefully Brown does what he says when he said no new taxes. Only time will tell. And, if he does what he says he will do Democrats are going to be very unhappy.
Get rid of the CRA’s!!
And, it there was no proposition 13 we would have a lot of senior citizens living on the streets unable to afford to keep living in their homes. Get rid of proposition 13 means putting people that can not afford the property tax on the streets. And, I thought the democrats cared about the poor.
@Michael
If local government wants to help redevelop an area that is legitimately blighted, why do they need the current ponzi scheme, instead of simply bonds, which have a finite period and allow the leveraging of public dollars without sucking away necessary tax revenue important to local services, including supporting the additional public infrastructure needs from the new development?
And please don’t give me that crap about LA Live needing any local subsidies. People here know better.