(Note:
Governor Brown proposes to
terminate all California redevelopment agencies by July and use the money
they raise to help bridge California’s 25 billion budget gap)
California's 60-year-old
Redevelopment Law is a laudable, well-intentioned device for eliminating
"blight." We're all aware of the run-down areas of many cities,
depressingly riddled with graffiti and crime -- desperately in need of
revitalization. However, many of us wonder how deserts, national forests
and Ferrari dealerships can be defined as blight. The governor is right to
abolish California's redevelopment agencies.
The wealthy desert communities of
Indian Wells, Rancho Mirage and parts of the Mojave Desert have been
declared blighted. A finding of "Blight," is a requirement for certifying
a "Redevelopment Area" and to avoid sharing area property tax increases
for schools, courts, county health services and police.
What's blight? Blight's whatever
the government says it is. The city of Coronado has been declared blighted
by its city council. San Diego once declared a Ferrari Dealership
blighted. The Mammoth Lakes golf course in a national forest was declared
blighted. Even our own National City declared its golf course blighted
until Roger Hedgecock sued and the Supreme Court decreed that it wasn't
blighted.
What causes blight? The principal
cause is rigid zoning laws which don't allow for new and different uses
dictated by changing consumer demand. All the money in the world wouldn't
help many distressed areas (East Village downtown) if not rezoned. When
private developers want to rezone deteriorating areas, it's pejoratively
called "Gentrification." The private transformation of blighted
neighborhoods is discouraged so as not to dislocate low-income residents.
When the government does exactly the same thing it's spun as
"Redevelopment." A secondary cause of blight is capital gains taxes which
discourage long-time property owners from selling.
What do Redevelopment projects do?
Stripped of pretense they in effect reduce taxes, reduce regulations,
upzone areas, and hurry permits within specific neighborhoods. They enable
government to subsidize some site improvements, the sorts of improvements
builders are responsible for in the suburbs. (Wouldn't we all like our
property taxes used for our personal landscaping with expensive paving
stones in our own driveways/sidewalks?) Redevelopment is the government's
way of conceding that less regulation and lower taxes really do lead to
greater economic growth.
What's seen -- What's unseen
Petco Park is seen as a popular redevelopment success. What's unseen:
The Padres pay less than 10 percent of its "$17,000,000 annual operating
expense"; $17 million is the real cost of the many mythical benefits its
boosters claim. Because all the money Petco loses is income to somebody --
the more it loses, the more successful it's considered.
Redevelopment law requires an
"affordable" housing element. This has resulted in the government paying
from $337,000 to nearly $500,000 for new low-income apartments (2.5 to 4
times the price of existing apartments). So expensive only the poor can
afford to live in them.
CCDC (Centre City Development
Corporation) is the most efficient pro-growth planning agency in San
Diego, maybe the entire state. Even so, there's an ugly side to some of
its redevelopment projects.
The ugly beauty of Horton Plaza
How many of you believe the Horton Plaza Redevelopment is a beautiful
role model of success?
How would you know, by what
criteria? After all, Shakespeare wrote, all that glitters isn't gold. One
criterion of success is whether a project earns more money for the city
than it costs. Another might be who pays and who receives the benefits.
Those who receive redevelopment benefits are not the same people paying
for them.
How many know that in 1977 the $46
million proposed Santa Fe Towers on Broadway ($159 million in today's
dollars) was killed so as not to compete with the proposed redevelopment
of Horton Plaza?
How many know that University
Towne Centre (11 miles, 20 minutes away) was reduced by two-thirds so as
not to compete with Horton Plaza?
How many know the proposed Carmel
Mountain Ranch "Regional" Shopping Center was not allowed in the city so
as not to compete with Horton Plaza? Horton Plaza: A beautiful end by
ugly means.
Those who love the law,
redevelopment and sausages best not see them made. Money, jobs and
benefits that should have come from the above stunted private projects,
the "unseen," never came to fruition. Also unseen, the taxes that would
have been generated for the city, schools, libraries, police, courts and
county health services that would have benefited San Diego residents who
don't live downtown.
You can look to others to explain
why government intervention is a catalyst for leveraging billions in
additional development and why allowing private enterprise to initiate
development is not a catalyst.
What's the solution?
Greenlining, aka Enterprise Zones, is an alternative to Government
Redevelopment. Upon designating an area depressed all planning controls
are to be relaxed except for health, safety and pollution standards. City
councils must dispose of all vacant or abandoned property in their
ownership, to be auctioned to the highest competitive bidder in the open
market. New developments are to be exempt from rent, wage or price
controls. Businesses migrating to the area would enjoy reduced property
taxes and no capital gains taxes if held for five years -- while being
prohibited from accepting other government grants or subsidies. Enterprise
Zones could be used only for the purpose of replacing blight -- period --
and not larded up with the usual impossible jobs and social programs.
The concept originated in Great
Britain by professor Peter Hall, a noted socialist and Sir Geoffrey Howe,
a Thatcher conservative. The objective: to eliminate government imposed
economic disincentives to private investment. We all want a better
environment. When profitable, entrepreneurs can produce a better
environment by providing goods and services desired by consumers. After
all, over 90 percent of this country was developed privately including
many once depressed areas. By creating an economic climate where taxes and
the cost of doing business are reduced the opportunities for profits
increase, and profits induce businesses to go into deteriorating areas
without a massive influx of public funds.
Fred Schnaubelt, Former Director San
Diego Redevelopment Agency, Former Director San Diego Housing
Authority, Former Chairman County Board of Public Welfare. San
Diego Councilman 1977-81
