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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 01:53 AM
I do think it would be a good idea for the City Manager and the Council to explain the likely significant differences between our situation and these other cities. I, like Sheila (I'm sure less than Sheila) have no grasp of the implications here. My guess is that West Hollywood is not remotely like these other citites, but it would be good to have that verified.
Stephanie August 13, 2012 at 02:07 AM
A big THANK YOU to Libi Uremovic for this blog. Finally some information that helps us begin to understand what is going on with the money "shift" that seems to be going on. Many of you out there attended the last West Hollywood City Council Meeting, or you watched it on Channel 10... Did any of you notice that you witnessed a meeting of the Successor Agency right in the middle of the Council meeting??? Yes, and that is because the members of the Successor Agency ARE one in the same as the Council members: Prang, Land, Heilman, Duran and D'Amico ARE the Successor Agency. We also witnessed the passing of Item 2. I, which slid through on the Consent Calendar (no discussion or input from the community) despite multiple requests from members of the public for the item to be placed on the agenda for open public comment. Why is this important? Because the Council was approving shifting invoices to the Successor Agency. The legal document to be approved and signed by the City but included NO amounts of those invoices. It passed on through and we, the public, could do nothing but sit there and "take it" with the explanation that it was required by the State. Get busy people. In the 60s we had bumper stickers that read QUESTION AUTHORITY. Time to print up another batch
Stephanie August 13, 2012 at 02:13 AM
...and my guess is WeHo is EXACTLY like these other cities.
scott ferguson August 13, 2012 at 02:15 AM
But again, as I've asked on another topic - didn't John D'Amico indicate he'd be a voice on the council raising these concerns? And if he is going along, does it mean it's not a real problem? Or has he been co-opted? Or might he have been a trojan horse? There may be no story here, or there might be a huge one. Could someone with knowledge address this?
Ali August 13, 2012 at 02:37 AM
Scott, candidates say all kinds of things. But once in office, many become a different animal altogether. Perhaps that is what happened to John D'Amico. This is the second instance where he has gone along with the crowd and you've questioned it. Just because he didn't dissent doesn't mean it isn't a problem. I admire your naivete in this crazy world. But it is time to wake up and smell the coffee.
Libi Uremovic August 13, 2012 at 02:55 AM
it's going on in almost every city in cali.....that's why i published this article all over the state... i'm an accountant with a masters' in administration ......i started auditing the books because our city officials are shameless in their treatment of the community.........you can read about the audit here: http://libionline.net/index.html this town is more corrupt than the city of bell....hidden payroll accounts, forged financial records....wasteful spending is the least of their problems..... ...i found a san franciso hilton hotel & room service bill where our city council woman and city manager did the nasties on my tax dollar... i realized that our elected and appointed city officials were going to bankrupt our city if i didn't stop them, so i'm devoting all of my time to stopping this government in place...i'm very aggressive - the finance director has already resigned ....he knows that he's going to prison.... it's not that our taxes are too low or that our services are too grand...it's corruption...
scott ferguson August 13, 2012 at 02:59 AM
I smell coffee perfectly well. And I asked it a second time because it is to me (and I am not remotely naive, just prefer to make up my mind based on facts, not innuendos or application of situations elsewhere that may have nothing to do with us) because it is a big deal. I only became aware of John D'Amico when he became a candidate, and then the guy who runs the WeHoNews (it is all city council all the time; it's why I stopped reading there, absolutely no objectivity there) was a big supporter as I recall, and when he won said that now things will be different. I'd like someone to explain why this situation is applicable to WeHo. The other cities mentioned are in all or most situations economic basket cases overall. WeHo remains prosperous. If indeed we are headed down the same path, of course we need to know. But a broadside about dangers of these agencies elsewhere proves nothing about our situation.
scott ferguson August 13, 2012 at 03:10 AM
To clarify, when Libi refers to "this city" in an earlier post, I believe she is referring to Imperial Beach per checking her link. This blog was posted on multiple Patch sites, not just West Hollywood. If I am wrong, I hope Libi lets us know.
Libi Uremovic August 13, 2012 at 03:13 AM
91932 - if you're looking for a beach that won't be packed on labor day weekend come down to i.b.c.a....our city is so corrupt even our beaches are empty... please support the audit and help save imperial beach and the rest of our cali cities...my contact info is in the patch profile if anyone wants me to look at their city's books or show you what to look for ... ...follow the money...
Libi Uremovic August 13, 2012 at 03:38 AM
Yes, I am auditing imperial beach and the reference is to my home city...sorry about that... how do you know if your city might have a problem? if they belong to the league of cali cities you have a problem http://events.cacities.org/cgi-shl/TWServer.exe?Run:MEMLOOK_1 west hollywood's council, city manager, attorney, public information officer, director of admin svcs, info svc/tech manager all belong to the league of cali cities...it's a problem... the league coached cities on how to circumvent ab26 and wage limits imposed after the bell scandal.... ...IB's council and city heads moved their wages over to rda to hid them....and that's what i'm seeing in cities all over the state...
scott ferguson August 13, 2012 at 03:54 AM
<<if they belong to the league of cali cities you have a problem http://events.cacities.org/cgi-shl/TWServer.exe?Run:MEMLOOK_1>> then West Hollywood would be in the same boat as Beverly Hills, Pasadena, Culver City, Berkeley and Santa Monica, all of which are also members
joninla August 13, 2012 at 04:48 AM
Libi - THANK YOU! so much for this information. I was an attorney and worked for a firm that created several contract cities and learned the general business goal/plan and attitude about using the city to gain extraordinary wealth (far beyond just making a 'profit') while keeping a very strong and active legal team to ensure all that you have described (and more) is done, to prevent even the slightest knowledge disseminate beyond the very few at the top of City Management, to hide (preferable anticipate and curtail) anything that might lead to the appearance of impropriety, quash with vigor at the first sign anyone who may begin to question anything being done by the city and continually. Meanwhile lawyers who's careers were based on this type of Municipal Law and exploiting the potentials of a small recently (back then) incorporated city were always retained and working on the next change or new law affecting CA cities like these. That top level of legal skill and expertise I was not close to or even knew exactly which firm and who at that firm was the the head or part of that legal team despite my professional skills being used and fully within the inner circle of secrecy and privileged information as to the current active legal business of the City. I did not have any RDA or any Commercial Development issues with our client city so it has been hard for me to figure all this you. Great help. Thank you.
joninla August 13, 2012 at 05:33 AM
@Stephanie I recall finding the same information on my own and at the time, I shared my concerns with you and think I even told you that after just researching and finding what I did, it was so shocking that it felt almost like "Incest" when I just read it, that it made me feel the need to immediately shower myself off. And I too have notice all the major issue coming to vote are done with such speed (by a panel that normally takes forever just to decided if everyone was in agreement about the next person who was going to share an opinion was correct and all council members were in agreement and no one had a objection to the next personal statement proceeding). Again, also using only the Agenda item Number/Letter and with the least fanfare or level of importance in details and fast reading of the less than adequate title of the formal matter as the vote is read and taken. Once voted, the entire meeting comes back the snail crawl, as Prang fumbles with the monitor/vote (which is already on full display on screen) to read the results and explain how the votes were cast. The only "tell" I've notices is John Duran's level of irritation and disgust and having to sit there and follow procedure spikes with important votes (as if so unimportant relative to the rest of the meeting that he is even more frustrated having to follow needlessly unnecessary procedure)
joninla August 13, 2012 at 04:54 PM
@Libi - After my own personal conclusions about the situation, the problem and the much larger and long term financial consequences being so close to yours, I wonder what you have found to be possible remedies. There appears to be absolutely no 'Oversight' body that regularly monitors nor that can investigate and then take appropriate action to stop what I did not know was so extensive across so many local cities. What I have come to think is the only way to stop this is by a (fair) criminal investigation and prosecution for whatever is indeed violations of the law (not just the RDA and related laws). From the beginning I was not looking to start an attack mentality and spread that kind of emotional reaction in the community. However, if noting else, the IRS and the Federal Tax Code could be the solution to the serious problem. We know eared income required to be reported by individuals annually includes a lot more than just cash or monetary earnings. Benefits or gifts given for services rendered is income. For example, in WeHo the Memorial Fountain/Park by IHOP was approved by the Court because the activists could not prove the donation to the memorial fund cased the council member to change his vote. All of which was finished before the actual fountain bearing the name Sal Guarelo as the honoree of that public monument. That no longer seems to be a charitable 501(c)(3) memorial to Veterans, but a personal vanity monument, & be tax implications.
joninla August 13, 2012 at 05:08 PM
Likewise, in Weho the not-for-profit housing agency is operating to build low income housing. However, it is also taking both the collected city held 'Incentives' collected/extorted over time from small 4-8 unit construction projects, the 'incentives' from WeHo's own massive 3 part $125 Million "25 year capitol improvement project" And now I see the $16 Million Dollar Robogarage behind City Hall (on city property) was designed to be a 'stacked incentive generating' project. The LEED Certification, New Parking Spaces, New Open Public Green Meeting space, Setbacks, Renewable Energy Solar Panels, New Drought Tolerant Landscaping etc... Those two sources of compiled "incentives" can only be used by private developers to exceed zoning limits. The latest opening yesterday of the Rehabilitated 64 senior housing project also had LEED Incentives, Open Space, Parking, LOW INCOME UNIT INCENTIVE BONUSES. The combination of the past collected Incentives, the current city projects on city land Incentives and this latest Housing Authority have collected and id the joint body that will transfer those Incentives to be used by the purely privately developed new mixed use super-sized project on La Brea Avenue. If that is the case, however many senior units actually created is irrelevant to the issue of the Housing Authority being a valid "not-for-profit" and instead an intentionally fraudulent means of giving city assets to the developers.
opinion August 13, 2012 at 05:31 PM
This same blog has been posted to every Patch in California to try to drum up "audit" work for Ms. Uremovic: http://libionline.net/contact.html That doesn't necessarily mean there's no merit to theissue, but it does mean that the issue is not being raised strictly as a public service...
joninla August 13, 2012 at 05:42 PM
I suspect the same - and like all those crazy info-mercials out there, every once in a while one comes on that has a product for sale that is exactly the thing you've been looking for. I'd rather have an auditor who fought to get the job, than one cherry picked by out city leaders, paid out of the City Funds at higher than standard rates and get a better than standard outcome from an audit and review of their own spending.
GoodGriefCharlieBrown August 13, 2012 at 06:16 PM
I think a bumper sticker 'THROW THE BUMS OUT" is also very appropriate for this city council.
James F. Mills August 13, 2012 at 06:17 PM
Alright folks. I've just deleted several posts These personal attacks will stop NOW. Anyone is welcome to post here provided they stay ON TOPIC. If you don't like what someone says IGNORE it. Do not respond to it. We are not here to engage in personal attacks. We are here to discuss the topic at hand. Stay focused on the topic. Treat others the way you them to treat you.
scott ferguson August 13, 2012 at 06:22 PM
Thanks James. I've deleted my most recent post (which you let stand) in the spirit of what you and I and hopefully most of us desire here.
Libi Uremovic August 13, 2012 at 06:55 PM
yes i have...i've been auditing imperial beach for 3 months, but my findings in IB will apply to almost every city in our state....this is a state issue and it's the basis of our problems in our cali cities... i quit my job to stop our city officials because our city is so corrupt....i walk the walk 'opinion'... i'm standing up for my community and my state... and yes, i need financial backing so i can continue the audit full time...if we can break the cycle of corruption in one cali city we can break the corruption in all of our cities... i'm running this as contract labor so people can deduct the full cost from their taxes....government agencies are our companies and we have the right to audit our books at any time - and deduct it from our state and federal taxes... i'll look at other city's books or show anyone how to do a simple audit to look for problem.... i didn't go looking for rda - i just started auditing the books....i knew i would find embezzlement and wasteful spending....but rda is eating up a massive piece of our city budgets throughout cali....
George Martin August 13, 2012 at 06:57 PM
Speaking of the League of California Cities, I don't understand how it's legal for cities to take taxpayer funds, pay them to this organization, which then lobbies and funds campaigns to support policies that don't always represent the interest of all city residents.
Chloe Ross August 13, 2012 at 07:04 PM
Where is my damn comment?
Chloe Ross August 13, 2012 at 07:10 PM
Okay. Yes on an audit. Any qualified neutral, legal auditor. Clearly a dirty little secret that must be addressed. John D'Amico. This is a well educated man whom I do not know personally and he brings his own mind and thoughts to the council. To assume he was elected to counter the CC is to say he is a tool (only Bobby Jindal - in my book - is a tool). And we do him a disservice in trying to parse his every decision. His outreach and availibility has been wonderful and I find him a good addition to the council - very good. Libi - thank you SO MUCH for this information. James - thank you for the sound advice. I advise ANYONE who wants to express their views to blog. Here or elsewhere.
Chloe Ross August 13, 2012 at 07:12 PM
I quote from Libi "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." Draw your own conclusions.
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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