The essence of redevelopment (when we still had it in California) was the idea that the new improvements built on land taken from the original owners of the redevelopment area would generate new taxes, and those would flow into public coffers for the betterment of the community. Right? Not really.
First, that money has to be used to service and eventually pay off the bonds the city issues in order to raise funds with which to acquire the land. Second, in the real world, cities and redevelopers make deals whereby that new tax revenue is diverted into the redevelopers’ pockets. Thus, in the wretched Kelo case the deal was that Pfizer would get a large tax abatement (it wouldn’t have to pay taxes for 10 years, as we recall), and the redeveloper chosen by the city would get the subject 90+ acre parcel for 99 years at $1 per year.
In California, redevelopment is gone, but these cozy deals go on. The headline and subheading of a news story in today’s Los Angeles Times tells it all, so let us just quote it:
“L.A. City Council Votes to let Mall Developer Keep Tax Revenue.
“Council Votes 10 to 0 to let Westfield keep up to $59 million in tax revenue produced by a shopping mall and hotel in Warner Center over 25 years.”
You can take it from there on your own, but if you want to see the article, telling how the developer will get 42% of the net new tax revenue produced by a planned shopping mall and hotel in Warner Center over 25 years, which is expected to generate $140 million in taxes during that period, click here.