Gary Silbiger
Last year on January 15, while Culver City was sponsoring its popular annual Martin Luther King, Jr. celebration, the City Council was busy holding an “emergency” special meeting about the relationship between its Redevelopment Agency and the City in order to create a Cooperation Agreement so that the City would be responsible for 17 ongoing projects if the Redevelopment Agency went belly up. On a Saturday? With 1 day notice? Without the facts about those redevelopment projects? Is this the way to receive public input on such a crucial topic? Nothing is noted in the agenda to justify that the meeting qualified as “special,” which is likely a Brown Act violation. Interestingly, the only City Council minutes missing on the City’s website is for that January 15 meeting.
In numerous subsequent City Council meetings, including last Monday's, both the Culver City Council and city employees rushed full-steam ahead – faster than the upcoming Exposition Light Rail train – passing every possible proposal to save the Redevelopment Agency, never concerned with the participation of the community or providing the facts about its Redevelopment Agency. To this day, most Culver City Redevelopment Agency financial disclosures have not seen the light of day. The City talks about only the positive aspects of redevelopment rather than taking a complete look at the broken system. It would be simple for the City to list each redevelopment project and itemize the amount of money spent by the Agency and City for the land, staff time, city improvements, etc. and at the same time list the money received by the Agency and City for the land, permits, taxes, etc. Then, each project should include a yearly detailed list of income for the owners, including the property tax (the increment tax) so the public will know the amount of property tax lost to the city.
We see the product of redevelopment in Culver City – City Hall, the Fire Station, housing, mixed use developments and more. Certainly, development has existed since structures first needed to be built. And even with Culver City’s extremely large Redevelopment Agency covering most of the commercial areas, some developers choose to build without the assistance of the redevelopment agency. The way some elected officials speak, you would think the wealthy developers will immediately close their businesses on February 1st to become waiters. Developers and the many related businesses will continue to build to make their profit. They will not disappear.
The state of California has been in a continuing disastrous financial crisis for reasons too numerous and complex to be covered in this article. As the State was searching for ways to pay for education and city services, the possibility of looking at redevelopment agencies as a solution became likely. The immediate controversy began in the summer of 2011 when the California Legislature passed 2 measures intended to stabilize school funding by reducing or eliminating the diversion of property taxes from school districts to redevelopment agencies. Assembly Bill 26 bars redevelopment agencies from engaging in new business and provides for their windup and dissolution. Assembly Bill 27 offers an opportunity for redevelopment agencies to exist if the local governments agree to make payments into funds benefiting California’s schools and special districts.
Quickly, the California Redevelopment Association, along with the League of California Cities and 2 named cities, sued Ana Matosantos, the director of the California Department of Finance, and John Chiang, the California State Controller. Then, on December 29, 2011, the Redevelopment Agency’s bubble burst when the California Supreme Court decided California Redevelopment Association v. Ana Matosantos, which includes the 2 major issues of Assembly Bills 26 and 27.
The first issue in the California Redevelopment Association case resulted in a unanimous decision by the court ruling that the Legislature has the power to create redevelopment agencies and therefore has the right to dissolve them – a concept that most law students learn in their first year of law school. Thus, Assembly Bill 26 is lawful and the Legislature has the authority to get rid of all redevelopment agencies.
The second issue of the California Redevelopment Association case, resulting in an overwhelming 6 to 1 majority vote, found Assembly Bill 27 invalid because the California Constitution forbids the Legislature from requiring redevelopment agencies to make payments to the State benefiting schools and special districts.
Therefore, the Redevelopment Agencies, based on their 2-prong law suit, lost both parts and now must lobby the Legislature to pass a law to permit new redevelopment.
How does Redevelopment work? Culver City has one of almost 400 local redevelopment agencies in California. Redevelopment agencies are intended to revitalize blighted areas and create affordable housing. The agencies buy parcels of land and sell it to developers at a bargain basement amount. The city continues to receive property tax based on the assessed value of the property prior to the effective date of the redevelopment agency area. Whenever the property tax assessed value goes up, all of that increase goes directly to the redevelopment agency. Culver City gets nothing from that additional property tax. The City should inform the public of the amount of property tax lost to the Redevelopment Agency during its 4 decades of existence.
As the Los Angeles Times January 6, 2012 editorial reads, “By allowing so-called tax increment money to finance projects, [redevelopment agencies] blocked that money from going to the state government or schools. And the lure of redevelopment was such that private developers sometimes got deals that smacked of favoritism rather than sound government policy. As Los Angeles County Supervisor Zev Yaroslavsky said, redevelopment ‘evolved into a honey pot that was tapped to underwrite billions of dollars’ worth of commercial and other for-profit projects’”.
With no facts given, both the Culver City News article on January 5, 2012 and the Culver City Observer article of the same day said the state will take all of Culver City’s redevelopment properties. “While it seems unconscionable, apparently the state will take those valuable properties, acquired with local funds and administered by local elected officials away from the people of Culver City” blares the Culver City News article by Gary Walker. Likewise, Stephan Hadland, publisher of the Culver City Observer, claims the State would acquire everything from the Kirk Douglas theater to the Expo Line Train Station. The readers are never told the legal basis for the taking of properties that are based on valid contracts. Likewise, the Council members rhetorically blame the State government for destroying Culver City, while Councilmember Jeff Cooper at the January 9, 2012 meeting actually singled out our State Senator and State Assemblymember for his unfounded allegation of damage to our city. The Councilmembers should look closely at the many redevelopment problems right here in their own backyards.
What are some of the reforms that should be instituted if the Legislature gives redevelopment agencies a second chance?
- Only truly blighted areas - defined as parcels having significant health or safety concerns – could be developed
- The 20% received by redevelopment agencies for affordable housing, as well as the remaining housing money from the past, must be fully allocated and spent for each project within a reasonable specified period from its receipt
- All redevelopment agency areas must have a democratically elected board of residents who are officially informed of all major aspects of each redevelopment project and give input to the elected officials
- An independent watchdog organization must have full disclosure from each redevelopment agency to be certain all projects are lawful and expenditures are free of corruption and abuse
- All developments must pay its fair share to improve local infrastructure, safety services, schools, and parks based on the effect the development will have on these entities
- All developments must be publicly bid so no favoritism or corruption takes place
- Redevelopment Agencies should consist of either elected or appointed members apart from its City Council members in order to have 5 independent individuals make those tough decisions
We need all the facts, both positive and negative, about redevelopment, thus allowing the public to weigh its worth and decide its value. Culver City should sponsor a well-publicized forum to hear the suggestions and opinions of the public about the importance of redevelopment to our community and the needed reforms. For this dialogue to be effective, the City should open up its records of its redevelopment agency in order for an objective evaluation of what changes are necessary. Without this information and a process for discussing this complex issue, it looks to me like there’s a lot being hidden from us.
Gary Silbiger is the Co-Editor of the Culver City Progress Blog and the Former Mayor of Culver City.
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