The editorial in today’s Los Angeles Times (Redevelopment Reality, March 11, 2011, at p. A18), finally takes a position on Governor Jerry Brown’s proposal to abolish redevelopment in California, and to redirect the incremental tax revenues it produces to the state instead of to the redevelopers’ pockets. Predictably, the Times’ nostrums — “reform, not extinction” — are a classic case of too little and too late. The fact is that for decades redevelopment, not just here in La-La Land but also elsewhere, has been a negative force, destroying badly needed low and moderately priced urban housing, and replacing it with malls and the familiar clusters of office buildings that are occupied by day by commuting suburbanites who wouldn’t be caught dead living in cities, and who, at the end of the day, head for the suburbs where they live, shop and pay taxes. That reality has been a factor implicated for a half a century in stimulating an out-migration from cities to the suburbs which have been thriving even as the cities hollow out.
But morally speaking, all that pales by comparison with the monstrous idea that individuals’ property, their homes and businesses, can be just taken from them by government compulsion, while they are concededly undercompensated and the redevelopers to whom their land is given are subsidized. The whole shebang is largely based on a pernicious system that subsidizes redevelopers with increasingly scarce public funds, while undercompensating property owners whose land is wrested from them by using eminent domain, even as California courts have taken the position that to fully indemnify the displaced property owners for all their demonstrable economic losses would bring about an “embargo” on the creation of public projects. But you won’t find a peep about any of this in the Times editorial. The abuses the Times worries about are municipal “high finance” capers whereby money that should have been spent on redevelopment is diverted to improper municipal purposes. But it doesn’t worry about the citizens who are displaced by municipal bulldozers under conditions of undercompensation.
There are two things that are conspicuous by their absence in the Times editorial. First, it never even mentions the abuse of eminent domain by redevelopment agencies’ takings of private land for the benefit of other, more favored individuals. That has always been a sore point, but it doesn’t rate a word in the Times editorial.
Second, there is the matter of what happens to the incremental tax revenues. The Times overlooks that there is no such things as a free lunch and to get a redevelopment project going, a redevelopment agency has to raise money to pay for the land it acquires. It does so by selling bonds. So those incremental tax revenues are not just a freebie — they have to be spent servicing and eventually paying off the accumulating mountain of redevelopment bonds. The latest data we have at our disposal at the momemt (State Controller’s Community Redevelopment Agencies Annual Report, 2006-2007, at p. xix), indicates that the true indebtedness of California redevelopment agencies (i.e. the amount necessary to repay redevelopment indebtedness) stands at — are you ready? — $82,429,304,000.
None of these considerations are reflected in the Times’ cheerleading for redevelopment. But as the country is increasingly learning the hard way, people increasingly resent eminent domain abuses, and are bitter about kicking ordinary citizens out of their homes and businesses to enrich municipally favored redevelopers.
Bottom line: Taking private property without fully indemnifying its owners for all their demonstrable economic losses is profoundly immoral, and public indebtedness has to be controlled and repaid.
Edited March 11, 2012