June 28, 2009

A Way Out of California's Financial Armageddon

Dear Governor Arnold,

Great News! I think I can help you with the state budget problems.

Things are pretty much doom and gloom here in Poway. The city laid off employees and cut back. The school district's teachers, bless their hearts, voted for a pay cut so they wouldn't have to fire as many teachers. And yet, last week, the Poway Redevelopment Agency shelled out $3.3 million for fake grass for an elementary and middle school. I think I found where all the money went. I think the redevelopment agencies have it coming out of their ears.

Seriously, Attorney General Jerry Brown is suing the makers of fake grass to force them to say just how much lead is in their product. But our Redevelopment Agency can't wait. They want that fake grass now, lead dust or not. They have so much money to spend, it is burning a hole in their pockets.

So, I'm thinking the state needs to get their hands on some of that redevelopment money. Now, I know you have already tried this and the courts have sided with the well-funded redevelopment lobbyists. If you lose that appeal, you can't just take the money directly from the redevelopment agencies. You are gonna have to be a little more creative about getting it.

So I am going to give you a few suggestions.

1.) Impose an incentive surcharge on redevelopment agencies.
Before we had a redevelopment agency in Poway, we used to pay our taxes and the city would use that money to provide services (police, fire, street maintenance) for us. Since the redevelopment agency was established, very little of our tax money directly pays for our services. First it has to be laundered through a development project.

It works like this. The Redevelopment Agency gives a developer some taxpayer money (often in the multi-million dollar range) as an incentive to get them to build something. They work out the details behind closed doors and finalize the deal with an exclusive (no bid) agreement. The redevelopment agency hopes to get a good return on their investment in the future by getting revenue from future sales tax and/or an increase in property tax. It is a bit of a gamble, all on the taxpayer's dollar, I might add. But hey, don't you think the state deserves a cut of the proceeds?

I'm not keen on gambling myself. Especially with the taxpayer's money. It is risky and also based on a couple of false premises. The big false premise is that these redevelopment projects increase sales tax. For example, giving a subsidy to Wal-Mart or a car dealership doesn't produce more sales tax. It might divert a bigger share of total sales tax to a particular city or entity, but it doesn't produce more sales tax. People don't buy more cars or underwear because there is a new dealership or Wal-Mart in town. Yet, giving tax money as incentives to businesses depletes the pot of tax money that can be spent on services. So, overall, the taxpayers are getting ripped off. There is a reason the Walton's are among the richest people in the world and cities are going broke.

2. Tax All Revenue Sharing Agreements.
I swear, I cringe every time I hear the phrase "win-win". It usually means the taxpayers lose.
Poway had an agreement with Gateway, the computer company that was located in our industrial park for a time. Gateway agreed to designate Poway as the location where their online sales happened. And Poway agreed to split the sales tax haul with Gateway. So Poway may have accrued more sales tax, but some other city was losing it, and Gateway was getting half of the sales tax that would have funded services in some city or other if Poway and Gateway hadn't struck this deal. The state should grab a percent, a huge percent of these deals as a way to discourage cities from stealing tax from each other and giving a big bunch of it to a corporation instead of funding services.

3. Reconfigure the way sales tax is distributed.
Heck, the redevelopment agencies pilfered the tax increment money from the state in the first place. It is time to get even. I encourage you to think big and do something that will have a positive impact on the way cities are zoned and managed. Do something about the way sales tax is distributed. I would suggest that some percent go to the state coffers, and the rest be distributed based on population.

Do you know how that would change the look of our cities and towns? We might be able to rezone thousands and thousands of acres from unneeded commercial zones to some public purpose like parks or a junior college. In Poway, our redevelopment agency made an agreement eons ago with the local junior college to build a satellite campus in town. The redevelopment agency is holding millions of dollars to fund that project. We passed a bond to pay for the campus; the college has millions of dollars in hand, ready to go. There is one obstacle. The college can't find a plot of land to put it on. The city has dibbs on every parcel. They want to use them all for revenue generation. They want to build a new town center even though the old one is losing tenants. Gotta have that sales tax. It is unsustainable, but that is all they know how to do. Sheesh, please take the sales tax away from the cities. You will be doing them us a big favor.

4. Charge redevelopment agencies for the social services the State must pay because of the low-wage projects built in the redevelopment agencies.

I know redevelopment is a state plan that is meant to provide jobs and housing for poor people. It is a noble purpose. Too bad it is so abused. Most of the development projects that redevelopment agencies produce are low-wage jobs in retail or the tourist industry. Someone is making a lot of money off of these projects but it isn't the workerbees. If a job produced in a redevelopment agency doesn't pay a living wage or benefits, then the state or federal government picks up the tab for health care, school lunches, transportation, childcare and food stamps. As I said, someone else is getting rich, while the taxpayers subsidize these projects. To defray some of the state's expenses, the state should audit the jobs created by redevelopment agencies and demand reimbursement for the subsidies that the state will have to provide. And they whine about unfunded mandates!

5. Cancel all grandfathered agreements and require pass-through funds to other taxing entities.
The reason the Poway Redevelopment Agency is spending $3.3 million on toxic turf is because they have an agreement with the Poway Unified School District to build some sports fields on school grounds. Poway did not want to pass through the money directly to the school district. As a result, our schools were crumbling and the district asked the voters to pass 2 bond measures in the past few years. If all redevelopment agencies were forced to pass through all the money to the other taxing entities, then the money could be spent where it is most needed and reduce pressure on the taxpayers and state funds.

6. Tax redevelopment agencies for refinancing debt.
I think they have a goose that lays golden eggs. Every time the city refinances, they say they are saving oodles and oodles of money. That is amazing because they have to pay millions of dollars to these lawyers and bond brokers every time they refinance. So if they are saving so much money, they should do it as often as possible and give the state a little cut each time. Share the goose. Well, let the redevelopment agencies keep the goose, but make them share the golden eggs.

7. Purge the property rolls.
Poway was one of the cities that abused the redevelopment program. Poway put a large chunk of undeveloped land in the boundaries of their redevelopment agency. Most of the land was not urban or blighted. In fact, most of it had only native scrub on it. Today there is an industrial park and acres and acres of very fancy housing and a world class golf course in the Poway Redevelopment Area. The estate-size lots and multimillion dollar houses are zoned rural residential. Poway also has additional zoning restrictions that prohibit building denser housing and/or retail or commerce developments in these areas without a public vote. Much of the Poway Redevelopment Area does not meet the purpose or goals of the law that provided for the creation of a redevelopment area. The state should require that property tax from rural residential property in a redevelopment area be returned to the state and no longer be diverted to a redevelopment agency.

Our city was not blighted before the Poway Redevelopment Agency was formed. But because of the rampant overbuilding and speculation, our city is now suffering from blight. Car dealerships have bailed. Stores are vacant. Industrial property is empty. All of the multi-family housing is concentrated in one part of town. That part of the city has very few acres of parks to serve the needs of residents who have no back yards of their own. Our schools are income segregated. The redevelopment projects contribute little property tax to the general fund. Our sales tax is lagging. This year would have been the 45th anniversary of our community parade, but the city cannot spare enough money to pay for it. Something is way out of wack when our general fund is depleted but our redevelopment agency has millions to spend.

Governor Arnold, I am not suggesting that you "steal" money from the redevelopment agencies. I am suggesting that you restructure redevelopment, maybe even shrink it. Drown it in a bathtub, if necessary. Restructure state financing so that the taxpayer's money is spent on services and not on funding the developers. There is nothing wrong with businesses funding themselves. Or making a profit. Heck, that is what businesses are supposed to do. What government is supposed to do is provide services. You know, of the people, by the people, for the people kind of stuff. So, could you guys please quit laundering our tax dollars through these redevelopment schemes?

Good luck with your budget impasse. Feel free to use any of my suggestions.


Chris Cruse

June 15, 2009

No Rain and No Parade

California is going to hell in a handbasket.
The economy still sucks.
Flipping multi-million dollar homes is getting tougher and tougher.
Water rationing starts in Poway on July 1st.

Need a little respite from bad news?
You're reading the wrong blog.
Poway plans to cancel the annual Poway Parade.

Yep. I found this nugget in tomorrow's budget update:

The Poway Chamber of Commerce and Community Services staffs have worked on a more cohesive approach to the month long Poway Days community celebration. The proposed changes would result in approximately $22,560 in budgetary savings. A concert funded by the summer concert series would occur Saturday September 12 in Community Park with a 90 minute family style evening community gathering. The event would replace Community Day at a net savings of $15,560 to the general fund. The Chamber would host a daytime western style community festival on Sunday, September 13 in lieu of the annual November Street Fair. This event has the potential to become a new signature event for Poway attracting regional interest and supporting the City s economic development objectives Similar to past Community Day events a community stage would showcase Poway recreation classes and there would be civic group booths and displays The parade would take a hiatus this year saving $7,000 in city staff overtirne expenses.

You didn't read it here first. Well, maybe you did. Bob Emery wrote about it in his June 3rd column in the Poway News Chieftain after getting a phone call from Betty Rexford telling him that "they" want to cut the Poway Days Parade.

..., the Poway Days Parade is the soul of Poway? It’s part of it. Sure, it really isn’t much of a parade compared to most, but it is Poway’s parade. What is next to go, Christmas in the Park? The kids fishing derby? Family campouts at Lake Poway? The summer concert series? The Train Song Festival? These, along with many, many other events, are the very soul of this community. They must be the very last items on the chopping block. Their relative costs are minimal and huge numbers of volunteer hours go into each one. They are what Poway is all about, kids families and community.

Me, I'm not a big fan of parades. I never watch the rose parade or the Macy's parade. I think it is really boring to watch a humongous balloon creep by. But when our kids were little, we took them to the Mother Goose Parade in El Cajon and dutifully trooped down to Poway Rd every September to watch our local parade. I think they liked it. I liked watching them enjoy it.

For me, the worst part of the Poway parades were the old western shootout re-enactments. I don't like watching armed robberies, western style or Citibank style. One year, I was taken hostage and "jailed" by costumed cowboys during the parade for not wearing a special badge. It was all in good fun. But my 2-yr old daughter wasn't having any of it. She screamed hysterically until they let me out of the "jail". The shoot-out terrified her.

My favorite part of the parade was hearing and seeing the Poway band marching by. They were always the best. No bias here. (Disclaimer- my kids were not in the band.)

The Poway parade dates back to well before we came to live in Poway in 1976. After the city incorporated, they changed the name of our annual celebration to "Poway Days" or "PowWow Days". At one point, I think, they renamed the parade "the heritage parade". Whatever. This year would have been the 45th annual Poway parade. Instead, it will be the year of the hiatus.

I'm with Bob on this, the parade is part of the "soul" of the community. It is the community. Kids, politicians, service groups, high school marching bands, beauty queens, soccer teams, clowns and church members. Supposedly, the name "Poway" is derived from an indian word, "Paguay" which translates to "meeting of little valleys." The Poway parade, has always been the meeting, the gathering of the people who live in those valleys.

I don't know who the "they" is that Mrs. Rexford thinks is canceling the parade. After all, she is one of the 5 deciders who will decide if the parade gets cut or not. To save the parade, the council will have to find $7000 in savings somewhere else. Might I offer a few suggestions?

Is the city still paying the chamber's expense for a part-time secretary to mail out brocures for prospective people who want to move to Poway? Might I suggest that they just post whatever is in those brochures on the internet and save themselves a big chunk of money?

And how about the Shop Poway campaign? This is a program funded by the taxpayers to try to convince folks to shop in Poway. The city pays for banners and hangs them around town to remind us to shop locally. There is no evidence that the money the city pumps into the program brings a return for the investment. In fact, there is anecdotal evidence that it doesn't.

This year, the chamber and city had their joint meeting featuring a stand-in for the mayor giving the state of the city address titled, "Poway, Your First Choice" at none other than a non-Poway location. Yep, they had it at the Bernardo Heights Country Club. Because the country club came in with a lower bid. Well, hello-o-o-o, I am gonna shop where I get the best bang for my buck too. So can we just scrap this program and have our parade instead?

Another possible cut is the July 4th fireworks at Poway High School. Other nearby communities are having 4th of July celebrations we could go to, so why not cancel our July 4th event and have our fireworks in September with our parade instead?

I can think of a few other places to save some money too, but they will have to wait for another post.

Ad from the Poway News Chieftain advertising the State of the City Breakfast