Blight Makes Right: October 26, San Diego

“Blight Makes Right” could be the title of the 50-year story of redevelopment agency abuse in California. Under the guise of ending blight, billions in tax revenues have been bled from public services and a permanent cloud of eminent domain hangs over millions of Californians.

Did this blight really ever exist? If so, has redevelopment ended any of it? And, if so, why does continue to grow, now covering over 1 million acres, or 25% of all urbanized land in California? These are the questions we face today.

My name is Chris Norby. I’ve served on the Orange County Board of Supervisors for 3 years, and 18 years on the Fullerton City Council. I serve as State Chair of Municipal Officials for Redevelopment Reform, whose publication, “Redevelopment: The Unknown Government”, I am providing as part of the public record.

There are 4 issues with “blight” that must be addressed:

1) The definition of blight is so broad as to render it meaningless.

2) Once defined, the blight designation becomes virtually permanent.

3) The designation of blight justifies billions in tax diversions away from the public interest and into private interests.

4) A designation of blight justifies eminent domain for private gain.

California redevelopment law’s definition of blight is so broad as to be meaningless. Some of our richest cities have been declared blighted. Indian Wells, for example, with a median household income of $250,000 has two redevelopment areas.

Residents fear a blight designation will depress property values, but voter approval is never asked. Citizens can force a vote by gathering 10% of the signatures within 30 days of the blight designation. Where this has occurred, redevelopment typically loses by wide margins. It was rejected in Montebello by 83%, La Puente by 67%, Ventura by 57%, and Half Moon Bay by 76%, for example.

Counties and school districts fear the loss of property tax revenues. Legal challenges, however, are difficult , and long-established, debt-ridden agencies are virtually impossible to shut down

State law must more narrowly define exactly what blight is.

A blight designation lasts for the life of the project area. Redevelopment areas are supposed to sunset in 40 years, but they are easily and routinely extended. There is no monitoring as to whether the blight has been removed.

To justify their continued existence, state law must require that redevelopment agencies periodically prove—at least every 5 years—that blight still exists, and then explain why they have been unable to cure it.

Once blight is established, property tax revenues may be used to subsidize purely private development. By law, all of these projects must have the sole purpose of eliminating blight. In reality, most are corporate welfare schemes enriching big box retailers, auto dealers, corporate chains, NFL owners and even casino operators.

Statewide, over $100 million in cash, land and tax rebates have been given to Walmart. In Orange County alone, Costco has received over $30 million in public handouts. Irwindale gave Raiders owner Al Davis $7 million just to talk. Here in San Diego is the infamous $6 million annual seat guarantee to the Chargers. The Los Angeles CRA gave $98 million for the now-failing Hollywood/Highland Mall, just as Costa Mesa’s Triangle Square—built using eminent domain and lavish subsidies—now stands virtually empty.

Redevelopment agencies currently divert about $3 billion annually. $3 billion. Think of all the teachers that could hire, all the library books that could buy and all the streets that could repair. $3 billion. That’s 10% of all the property tax revenues in the state. What has any of this money done to cure blight? And if it has, let the agencies declare victory, shut down and return this $3 billion annual revenue to the counties, school districts from which it was taken.

Far from economic development or ending blight, these are a net drain on California’s economy and public treasure. The most comprehensive study of redevelopment in California was conducted by the Public Policy Institute in 1998, with veteran researcher Michael Dardia studying 114 project areas. Their report “Subsidizing Redevelopment in California” showed no net benefits compared to comparable areas without redevelopment. A similar LA Times report of January 30, 2000 reached the same conclusion.

State law must require that redevelopment funds be spent only on public projects, not private development. Current law requires 20% be spent on housing. Additionally, we could require that 20% be spent on transportation, 20% on school construction, 20% on storm water clean-up and 20% spent on libraries.

Lastly, a blight designation makes all properties within a redevelopment area subject to eminent domain for the benefit of other private interests. Your home may be given to a developer. Your business may be seized and given to a competitor. Your church may be grabbed and given to a big box chain. Your open land may be taken and handed over to a foreign auto maker.

The designation of blight has a depressive effect on local property owners. Vibrant neighborhoods are now stigmatized. Eclectic business districts with a rich mixture of locally-owned businesses are now under the shadow of eminent domain. The blight designation thus steals from our communities the diverse and unique mixtures of people, housing types and businesses that made them so special.

Do all Californians have the equal right to own and enjoy their homes and businesses? Or shall they be sacrificed at the demands of the wealthy and powerful? Is eminent domain to be used in California to serve the public? Or for private profit?

The abuses of eminent domain are as widespread as they are tragic. Cottonwood Church’s property in Cypress was condemned for a Costco. Norm Neilson’s open desert land in California City was condemned for a Hyundai test facility. Phil Gold’s 99 Cent Only store in Lancaster was condemned for a Costco. Bill Vega’s family-owned repair shop in Brea was seized for a brew-pub.

My own Orange County Health Care Agency’s facility was condemned for a Santa Ana BMW dealership expansion. Under current law, the Santa Ana redevelopment agency could declare selling expensive German cars to be a greater public good than a health facility housing over 200 county restaurant inspectors.

The CRA claims that eminent domain is a necessary tool for economic development. In fact, just the opposite is true. The most successful projects are those where cities work with local business owners, not dispossess them. Successful projects are those that enhance local neighborhoods, not destroy them.

In fact, it is the fear of eminent domain that mobilizes citizens and small property owners against revitalization efforts. Lifting that fear will usher in a new era of trust between city hall and neighborhood groups.

Look at cities in my own Fourth District of Orange County. Fullerton's historic and vibrant downtown was rehabilitated without a single use of eminent domain. Anaheim's new Platinum Triangle is a dynamic high-density mixed-use area of multiple ownerships, where Mayor Curt Pringle has told developers eminent domain will not be used for their projects.

City council members do not want to use eminent domain against their own citizens, but often feel pressured by short-sighted developers, big box retailers and auto dealers who pit city-against-city for more land and subsidies. By limiting eminent domain, the legislature will create a level playing field for all cities when dealing with developers.

In its narrow 5-4 Kelo vs. New London decision, the Supreme Court lifted all federal limits on eminent domain, but it did challenge the states to put their own limits on this awesome power. The public demands this. Polls from Orange County to San Francisco show by a 9-1 margin that voters favor protections for small property owners.

There must be clear standards to define blight and to monitor how it has been cured. If redevelopment is to succeed, it must precisely define its objectives and the means to achieve them. It must fund only public, not private, projects. It must respect the right of all Californians to own their own property.

Redevelopment agencies are state agencies that are wholly within the power of the legislature to control. Now is the time, and you are the people to do it