March 24, 2011

"It's precious"

In January, Gov. Brown announced his intention to get rid of redevelopment agencies as part of his plan to balance the state budget. Brown planned (and still plans) to dissolve the agencies, pay off their debt, and redirect local property tax back to schools, safety services and other local entities that have been "robbed" by the redevelopment agencies.

Fears that the goose-that-lays-golden-eggs will soon be gone has redevelopment agencies taking actions to horde their assets and commit to spending future assets. In less than 3 months, California redevelopment agencies have issued over $770 million in new bonds, and committed billions to new development projects. Meanwhile, 19,000 California teachers got pink slips last week. The number of laid off teachers could grow higher. Much higher.

California's deficit is $26.6 billion dollars. Brown wants to make up the deficit, half with cuts and half with extensions of the temporary taxes that were enacted under Schwarzenegger, but he needs the votes of 4 GOP state legislators to get the tax extensions on the ballot. He is unlikely to get their votes. They keep expanding what they want for those votes. I think the GOP legislators are just messing with Brown. I don't think they have any intention of negotiating in good faith or voting to put the extensions on the ballot so people can choose between them or more cuts. They just want to see him fail, and if that means thousands of teachers lose their job, so be it.

Brown also needs to dissolve redevelopment agencies to get the budget balanced. What does redevelopment have to do with teacher's pink slips? Redevelopment grabs property taxes that normally would go to schools. The state has been giving extra money to schools to make up for the loss, but they can no longer afford to do that.

The chart below is from the County of San Diego's website and it shows how property taxes will be apportioned in FY 2010-2011. Click on the graph to make it larger.

Redevelopment agencies are taking $400 million of local property taxes in San Diego county. That is 10.7% of all property taxes in the county. That is a bit less than the statewide average of 12%. The percentage of property taxes that has been going to redevelopment agencies is increasing steadily. In 1970, only 2% of all property tax in California went to redevelopment agencies. By 1980, the percentage doubled to 4%. By 1995, it doubled again to 8%. And now we are at 12% statewide. It is possible that redevelopment could consume more than half of all property taxes, even more. The bonds that the redevelopment agencies sell have to be paid back with future property taxes.

After redevelopment agencies are dissolved, Brown plans to use some of the money to pay off their debt. The rest of the money will be distributed among the other local agencies. Eventually, after the debt is paid off, all of our local property taxes would be distributed to provide local services. If the money that is diverted to redevelopment agencies were proportionately redistributed to all other entities, here is what the distribution would look like for FY 2010-2011:

Schools would receive 5.3% more of the county's property taxes, in the 2010-2011 FY just in San Diego county. The school's share of that diverted $400 million is almost $200 million this year.

Poway's redevelopment agency took almost $40 million in diverted property tax last year. Almost half of that would have gone to the school district if Poway did not have a redevelopment agency. And while Poway does have an agreement with the school district to spend money on the performing arts center and some joint use sports fields, the amount of money Poway redevelopment agency has given the school district is NOWHERE near $19 million a year. That $19 million could be used for teacher's salaries instead of the $5 million or so that went for artificial grass and bond payments on the performing arts center.

Redevelopment agencies are taking money from more than schools; they are also taking from libraries, the county, special districts and the cities' own general funds. General fund money is what pays for police and fire and city workerbees. The City of San Diego just approved $4.1 billion in redevelopment spending, and that doesn't even include an estimated $800 million they want to spend for a new Charger's stadium. But San Diego also plans to cut back on city services because their general fund is hurting pretty bad. They can't even man all of their fire stations. The choice is clear. We can use our tax money for schools and safety services and local needs or we can use it to fund development projects, like stadiums, shopping centers and luxury golf courses.

It is kind of surprising that school districts and teacher's unions, and other city worker's unions and safety services unions haven't said "Boo!" while cities have gone on this gluttonous rampage, selling bonds and grabbing assets and moving them around to keep them from being used by the state to pay off the redevelopment agency's debts. Why so silent?Poway didn't run out and sell bonds, but they did have a special meeting last Friday at 7:30 A.M. They transferred 75 properties owned by their redevelopment agency to the city and to a new entity they created, a housing authority.

No kidding, a public housing authority?

Yes, Poway created a public housing authority. The same Poway that has supported legislation to allow cities like Poway to pay some other city to build our low income housing. The same Poway that tried to get Sandag to let Poway pay National City to build our fair share of low income apartments in the last housing distribution cycle. The same Poway that sold all of their mobile home parks because they wanted OUT of the affordable housing business. The same Poway that built retaining walls instead of using 20% of their redevelopment money to build low income apartments and got sued by the Legal Aid Society and lost. The same Poway that makes an annual declaration that they need an exemption to state law that requires them to allow granny flats to increase the supply of affordable housing. That same Poway decided they had to have a housing authority to replace the slums of Poway.

In order to create the Housing Authority, Poway first they had to declare by resolution, that there was a need for an authority to function in Poway. According to the California health and safety code 34242 and 34243

The governing body may adopt a resolution declaring that there is need for a housing authority if it finds either of the following:
(a) That insanitary or unsafe inhabited dwelling accommodations exist in the county or city.

(b) That there is a shortage of safe or sanitary dwelling accommodations in such county or city available to persons of low income at rentals they can afford.

In determining whether dwelling accommodations are unsafe or insanitary the governing body may take into consideration:

(a) The degree of overcrowding.
(b) The percentage of land coverage.
(c) The light, air, space, and access available to the inhabitants of such dwelling accommodations.
(d) The size and arrangement of the rooms.
(e) The sanitary facilities.
(f) The extent to which conditions exist in such buildings which endanger life or property by fire or other causes.

When Poway created their redevelopment agency in 1983, the council made a finding that 8200 acres of mostly undeveloped land was so badly blighted, that private enterprise alone could not successfully make a go of any development on it. The city used a program that was meant to help poor, urban communities spiffy themselves up while providing housing and jobs for poor people. Here we are, twenty eight years later and the city has done such a bang up job of creating housing and jobs for poor people that they now need to create a housing authority so poor people don't have to live in slum-like conditions.

To be fair, nobody in the city has really pretended that this housing authority is anything more than a greedy grab for as big a chunk of the taxpayer's pie as they think they can get. The dishonesty is in blaming the state for "stealing" local money. In fact, the real choice is about what our local property taxes should be used for. Should it be used for safety services, local municipal services,libraries and schools? Or should it be used for development projects that enrich the likes of the Spanoses, Moores and Waltons?


NEWS_FLASH said...

Thank you for pointing out the major pitfalls of the Redevelopment Agency scam which has been pulled on California property taxpayers for years. Anyone who has been paying attention should be able to figure out that it has been the Redevelopment Agencies which have been “robbing” funds from California schools and other basic services --- rather than the other way around.

How can Republican state legislators – who always want to claim the high road when it comes to minding the state budget and controlling spending – possibly continue the nonsense of protecting Redevelopment Agencies? These were state sanctioned local agencies set up years ago which have almost ALWAYS been riddled with major abuses and outright self-serving manipulation. AND..... THIS INCLUDES POWAY OWN REDEVELOPMENT AGENCY -- WHICH IS RUN BY OUR OWN POWAY CITY COUNCIL MEMBERS. The state Republican legislators' hypocrisy is amazing. Those who have been around the political block for a few years might conclude that these Republicans are possibly “beholden” to the Redevelopment Agency bond brokers and the California developers who have been making big bucks off of these agencies. Hmmmm……

One would also think that budget-conscious tea-baggers would be screaming like crazy to shut down these “money pit” agencies. Is it because of Redevelopment’s connections to so many Republicans that the tea-baggers are giving the Redevelopment Agency system a “free pass”??? Or, perhaps the tea-baggers just don’t get it???

Anyone who would like to understand more about the inner-workings of California Redevelopment Agencies should check out REDEVELOPMENT: THE UNKNOWN GOVERNMENT. It is a very easy read. Hey, at least check out the great cartoons!! Please see link:

powayblog said...

Chris Norby's book, Redevelopment: The Unknown Government, is an excellent read. Norby was the only republican to vote for dissolving the redevelopment agencies.

Redevelopment is anathema to many of the values that republicans (especially tea party folks) hold dear. It is such an unnecessary government intrusion into the private sphere. Redevelopment agencies are one of the biggest abusers of the power of eminent domain. Redevelopment creates lots and lots of government debt.

So, why won't the republicans support ending this scam? Are they just obstructionists who want to see political opponents fail and they don't give a damn about the people they are paid to serve? Seems that way.

NEWS_FLASH said...

One more thing….. What’s up with the City of Poway creating its new HOUSING AUTHORITY??

Poway has never --- and I REALLY mean NEVER --- lifted a finger to do anything about its many (30+) privately-owned (read: slumlord) apartment complexes and their well-known overcrowding (2 and more families per apartment), health code violations, sanitation problems, alleged gangbanger apartment residents/drug dealers and other crime-related problems, excessively high rents, safety problems and lack of basic upkeep, retaliatory evictions for “complainers”, etc. etc.

Mayor Higginson and councilmembers have, in fact, officially stated numerous times that they “want to get out of the housing business” and have sold off the Poinsettia and Poway Royal Mobile Home Parks in addition to turning over management of the city’s many Affordable Housing complexes to private management companies. So…… all of a sudden, the city decides to form a new agency to “address housing problems”????

Over the years, we’ve seen Mayor Don Higginson and other council members routinely become annoyed and dismissive with anyone who comes before the council on serious situations regarding Poway apartments --- including the city’s own Affordable Housing apartments --- and now Mayor Higginson wants to claim creating a Poway Housing Authority agency is the “moral” thing to do. What hypocrisy!!!

The only thing the City of Poway has ever done is to begrudgingly fulfill the minimal housing requirements from SANDAG, the Redevelopment Agency and State of California. And, of course, our illustrious Mayor and City Councilmembers --- who always tend to reside in wealthier NORTH Poway areas --- have ensured that Poway’s Affordable Housing high density apartment complexes are always concentrated in the core of SOUTH Poway. Gee…… Like South Poway needs MORE high density apartment complexes added to the 30+ privately-owned high density complexes already located in this small area. So….rather than working to improve the socio-economic problems and myriad other issues associated with so many low-income folks SEGREGATED within a small community, the city has only ADDED TO THE SEGREGATION AND ONGOING PROBLEMS….. AND THEN TURNED A BLIND EYE TO DEALING WITH THE CONSEQUENCES.

The issues at Poway’s many apartment complexes are, admittedly, not simple fixes. However, other cities have tackled similar problems successfully. Other cities faced with overcrowded apartments have established strictly enforced codes. Also, other cities often have rent-control programs set up which resolve the reason for overcrowding in the first place. Health and safety violations require constant vigilance and should always be a top priority. It can be done. But it takes a consistent, very determined overall effort and the entire city needs to get behind making it happen --- starting from the top.

However, over the years, Poway has refused to even consider this stuff. As long as Mayor Higginson and others on Poway’s City Council refuse to seriously deal with South Poway issues, these problems will never be resolved in any meaningful way. A major change in attitude and focus must start at the top. It’s called “leadership”.

Thus, knowing Poway’s TRUE housing priorities --- which have become all too obvious over the years with our self-serving Poway City Council --- one can only conclude that THE PRIMARY UNDERLYING PURPOSE OF THE NEWLY-FORMED POWAY HOUSING AUTHORITY IS TO ENSURE NO FUTURE AFFORDABLE HOUSING COMPLEXES ARE PLACED IN PRISTINE AND PERFECT NORTH POWAY. The city, Mayor Higginson and the City Councilmembers will officially claim that the Housing Authority’s purpose is to “maintain local Poway control” and to deal with various housing issues, etc. But those of us who have been carefully observing Poway city government for many years know better.

Anonymous said...

I have been trying to view Chris Norbys' book "Redevelopment: The Unknown Government" online. While I have found many links to it (including one from Norbys' own website), none of the various links including the one posted at the bottom of the first comment of this article work. I understand it has been updated annually. If anyone can provide a link they can send it to

PowayBlog said...

I haven't figured out how to post links in the comments.

Here is the URL, which I had to put in 2 lines or all of it does not show up: