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BLOG: The Reality of Redevelopment Agencies

Facts about Redevelopment Agencies. Are there lessons for West Hollywood to learn?

What do the Cities of San Bernardino, Mammoth Lakes and Stockton have in common? All three cities follow RDA and the League of California Cities, all circumvented AB26, and all three went bankrupt within a year.

Tax revenue is collected for the basic needs and services of the community, not to fund the private sector. The League of California Cities and the RDA Association are not on the side of the people. They are lobbyist groups whose purpose is to divert money to themselves and their affiliates.

In 1945 California authorized Redevelopment Agencies (RDA's) to alleviate urban blight. Blight is defined by state law as a combination of physical and economic conditions – vacant buildings, declining property values, poverty, high crime rate – that would prevent private enterprise from developing the area.

In the beginning very few cities used RDA, now most California cities not only use but abuse RDA. Half of California cities claim between 11-30% blight and 20% of cities claim over 30% blight to acquire land for RDA. The entire city of Imperial Beach has been declared blight. Imperial Beach is 1 ½ miles of beach-front property in Southern California; Does that sound 'blight' to you?

Powers of RDA:

Eminent Domain – Once an area is declared blight the city has the right to exercise the powers of eminent domain. The League of California Cities considers the powers of eminent domain an 'important tool' and encourages city officials to declare areas of their city blight to obtain eminent domain powers.

Take Out Loans and Issue Bonds without Voter Approval – RDA's use a federal Community Development Block Grant to start a project, but the remainder of the funding comes from issuing debt. By declaring city blight the city is able to side-step Prop 13 to take out loans and issue bonds without voter approval.

Funding of RDA:

RDA gives the impression that the money is from state or federal grants, but 97% of all RDA finances are funded by the city. RDAs receive the federal Community Development Block Grant (CDBG) to begin work, but all redevelopment activity is financed by taking out loans that the city backs with future property taxes.

Tax Increment Financing: When Prop 13 passed RDAs feared a limited money stream, so they lobbied for special property tax revenues. After an RDA area has been established all property tax increases – less 2% for inflation – goes entirely to RDA instead of being used for the basic needs of the city. In the case of Imperial Beach, all of IB is declared blight so ALL property tax increases go to the RDA program. The payments to RDA last as long as there is debt outstanding, and RDAs no longer have plans to conclude their projects, so eminent domain remains on the properties.

Cost of RDAs:

We can see the results of RDAs in the bankruptcies of Stockton, San Bernardino and Mammoth Lakes. RDA eats up $1.5 billion/year of our cities budgets in the State of California. The financial records of Imperial Beach show the actual costs of RDA on a city.

97% of all RDA funding is from the city itself. Taxes are collected for the general needs of the community, not to fund the private sector. Originally an RDA project took about 2% of a city's budget, now RDAs are swallowing up to 30% of city budgets.

The bigger problem is that the cities are spending even more on RDA than they are acknowledging. Imperial Beach's RDA is 32% of the budget, but I also found $4 million spent on RDA that is being funneled through 'dump accounts.' The budgets of numerous city departments have 'ABC' accounts listed with their expenditures. The ABC accounts pad the departments' budget by as much as 25%. The ABC accounts on the IB Fire Department's $2.3 million budget is $450,000 – 19% of their budget is being padded with RDA costs and legal fees.

Legal Fees:

Google 'RDA' and you'll find dozens of lawsuits pending. The Imperial Beach Financial Report for the year ending 06/30/11 stated City Attorney Fees at $244,000 – but paid out over $500,000 defending RDA lawsuits. This year the City Attorney Fees are budgeted at $200,000, but have already spent $600,000. In 2011 the City of IB also cut two checks to the RDA Association to help pay for their legal fees.

Massive Payrolls:

Another similarity of every city that belongs to RDA and the League of California Cities is massive payrolls for the top elected and appointed officials. Mammoth Lakes has a population of 8,000 people yet the Comptrollers' 2010 report shows their City Manager's salary is $198,533, Assistant City Manager at $186,358, Exec Assistant to the City Manager at $71,708 and Airport Director at $151,431.

What are the salaries of elected and appointed officials in the city of Imperial Beach? That is information the City refuses to disclose. The new budget shows the City Council and Appointed City Officials shifted half of their payrolls to RDA accounts to avoid the State Wage Limits. City elected and appointed officials are giving themselves multiple titles to double dip wages.

How To Tell If Your City Is RDA? Simply look at the City Council Agenda.

“JOINT REGULAR MEETING OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY, MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE SUCCESSOR HOUSING AGENCY TO THE REDEVELOPMENT AGENCY, AND MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE HOUSING AUTHORITY ..”

The Mayor and Council are hired to oversee the affairs of the City Employees and finances. It is a conflict of interest for council to belong to lobbyist organizations and to use tax payer dollars to fund lobbyists. 'Successor' RDA agencies are RDA on steroids. Their purpose is to shift as much money as possible from the city general fund to RDA regardless of the harm done to the city.

Our government functions on a system of checks and balances, but when city elected and appointed officials conspire together we have lost balance.

The League of California Cities lobbies every branch of city government. Their website lists departments for council, city managers, city attorneys, finance, city clerks, fire, police and public works. The League nurtures a mentality in city officials that circumventing laws and putting their cities in debt with unnecessary construction projects and massive salaries is acceptable.

Circumventing wage laws and burdening cities with massive debt from unnecessary construction projects can no longer be acceptable in our State. We must close down RDAs and remove any elected or appointed officials associated with lobbyist organizations. Government officials are paid to work for the people, not to conspire against us.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

scott ferguson August 13, 2012 at 07:48 PM
Chloe - I respectfully disagree. I read D'Amico's literature, and he came to my door and we talked for about 15 minutes last year. In both, he conveyed that he wanted to be an independent voice and to be not part of the majority (or unanimous) bloc, while considering each issue on its own merits. I believed him then, and still do. That's why I've said that my belief is that if he voted for the garage or for the issue raised here, he did so because he believed that on merit they were the right decisions. I appreciate that he is not with one bloc, but deciding issues on a case by case basis. It's something I also am in favor of.
Chloe Ross August 14, 2012 at 01:15 AM
re: John D'Amico - okay.
Rudolf Martin August 14, 2012 at 01:27 AM
libi, thank you for posting this. very interesting city you live in! i have 2 quick questions if you care to indulge me. i have commented in the past about outstanding obligations that our RDA in WeHo has on their well hidden but public official books (more than twice the amount of an entire annual city budget). I am still unclear who (if anyone) will ultimately be liable for all this debt. can you enlighten me on that? secondly i have been assured by city officials that the "Successor Agency" merely 'winds down' the business of the RDA (only administrates previous obligations) and it seems the state has turned off the spigot for these slush funds. have you seen evidence of wrongdoing SINCE THEN in the cities you looked at? thanks. it seems i missed some contentiousness among commenters earlier. james had to put his foot down in ALL CAPS, oh my! apparently the issue of state and municipal accounting technicalities really get the tempers boiling. who knew! let's all be thankful we have people to argue with!
joninla August 16, 2012 at 09:12 PM
@Rudolf Martin - I have found your comments and public input (the few I've seen) and remain impressed with the attention to detail and keeping serious issue on-topic. I have said this before and it has been taken as somewhat of a facetious critique of my negative opinion about the greater purpose and operations of the Council and City Manager that must take place when city hall is closed that those spots marked no-parking 24/7 for City Hall employees only is for the off-hours necessary for John Heilman the City Manager and I don't know who else (if any) do the real work that is necessary to conduct the private agreements between the City and the Developers that remain outside the official public records of the City, and the City Records are filled with only vague reference (usually approved unanimously in a group of issues all at once) to what back-story that led to a conclusion we need (eg a robo garage, a plummer park design based around a massive underground parking structure, a "need" for a 200k+ feasibility study to see if city hall and the the sheriff could be combined into one facility on the Sheriff's existing site - which I too thought at first was obviously possible - but after glancing a google maps, I realized the Current Sheriff's Station that has out grown it need for space, sits on a lot not much larger then city hall. There is no way to increase the size of the Sheriff's station AND dump city all on that one lot)
joninla August 16, 2012 at 09:26 PM
(sorry part two) Consistent the City remains as tight lipped about everything that is not under a mandatory notice and disclosure legal requirement. The few 'extremely forthcoming for no apparent reason' explanation about a topic nobody even knew about and had not yet become even questionable. Likewise, people have told me they have personally spoken with Heilman or another city leader and they now understand it is not a decision by the City which has upset a small group of informed residents, but Heilman explained how their hand are tied and there is a specific law that is making them do the part of a project that has caught the attention of genuinely concerned regular followers of the city. Each time I followed through on what 'law' said something as stupid as (e.g. by law WeHo is required to increase its population density. Hogwash - the most densely populated tiny city around is required by law to become more dense.) There is no such law. There are several 'NEW' requirements the city increase the number of housing units in the city BECAUSE the city asked for and was approved for zoning increases IN EXCHANGE for also including affordable housing units. That's not quite the same thing as a Law imposed upon the city which it has to follow, but the requirements from the City decision to seek increased for profit mega projects. Thus, any explanation is a misleading wording of the truth. The opposite of what is said is the truth.

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