Editor’s note: the following is a response to an article published several weeks ago on the recent interest surrounding the resurrection of redevelopment agencies. The response below is from Tony Ferrara, Mayor of Arroyo Grande.
A few weeks ago, Public CEO published an article by William R. Maurer, an attorney for the Institute for Justice; a firm that defends against eminent domain abuse. In his commentary, Mr. Maurer blames former redevelopment agencies for just about everything that is wrong with government; most notably was his assertion that redevelopment was the root cause of rampant “eminent domain abuses” as well as “severely undermining the state’s fiscal stability.” He was wrong!
Let’s start with the basics: The demise of redevelopment agencies will not stop the use of eminent domain. In short, a city doesn’t need a redevelopment agency to exercise their right to use eminent domain. Mr. Maurer paints a singular picture of cities that take a “jack boot” approach to eminent domain; landing forcefully on small businesses or homes, seizing property, and leaving occupants sitting on their suitcases outside in the cold, destitute and without hope. Again, he couldn’t be more wrong!
Many cities, including my own, have standing policies that discourage the use of eminent domain. However, larger cities that have depressed areas, high crime rates, and absentee landlords that charge exorbitant rent for run-down, vermin infested neighborhoods, do use eminent domain. Other cities use eminent domain to rid their areas of ugly, unsafe, and unsightly “brownfields.”
Cities did not make the determination that eminent domain could be used to take property for the greater “public benefit.” That determination was made by the United States Supreme Court. Mr. Maurer is an attorney. Surely he is aware of the Kelo v. City of New London case. The Court determined that private property could be taken in accordance with the provisions of eminent domain, and transferred to a private developer for the purpose of economic benefit. The Court found that if an economic project creates new jobs, increases municipal revenues, and revitalizes blighted areas, it then qualifies as a “public use” as defined in the United States Constitution. Following the Kelo Decision, Article I, Section 19 of the California Constitution has accordingly broadened the definition of “public use.”
In 2006, two years after the Kelo Decision, petitioners in California attempted to restrict the use of eminent domain by imposing unreasonable reimbursement provisions and requiring court adjudication of every aspect of the eminent domain process. Veiled as a “protection” against the unlawful taking of property, Proposition 90 was placed on the November 2006 ballot and would have created a new category for lawsuits, costing taxpayers billions of dollars per year. The only people who would have benefitted were the attorneys. As such, Proposition 90 failed by over 3 million votes.
Cities that use eminent domain will opt for the best possible outcome for both the property owner and the city. Most redevelopment law firms recommend the following approach when initiating eminent domain.
- Meet with the property owner and determine if a friendly condemnation is possible. That occurs when both parties agree to the transaction, to include compensation.
- Ensure that the property in question is fairly appraised and that appraisals are made available to the property owner.
- Make every reasonable effort to relocate a business or resident to another suitable location within the city. In some cases, the business or resident may choose to occupy a portion of the new project at the same location. In these instances there is often a condition in the project that compensates a business for “downtime” during construction, or provides reimbursement for temporary housing for residents during the construction period.
- Compensate the property owner for “more” than market value of the property.
Now let’s return to Mr. Maurer’s assertion that getting rid of redevelopment agencies was good for the “fiscal stability” of California. Even though the legislature supported the Governor by voting to abolish redevelopment agencies, they simultaneously sponsored companion legislation that would allow redevelopment agencies to continue to exist as long as the agency paid the State of California a prescribed amount of the tax increment revenue generated on an annual basis. Cities challenged this legislation on constitutional grounds. The Supreme Court determined that the legislature created redevelopment agencies, and as such, had the authority to abolish them. However, the Court also determined that the companion legislation requiring the redirection of local tax increment revenue to the State, was unconstitutional and declared it void. If you talk to most legislators and the Governor, they will tell you they didn’t want redevelopment to “go away.” What they wanted was money to offset the State deficit. And they were willing to go to any extreme to get it. They expected cities would “pay the ransom” and opt to keep their redevelopment agencies intact. They didn’t anticipate the Court’s intervention.
I was informed by several legislators at the time, that if “cities could come up with enough money to help pay off the State’s debts, they could keep redevelopment.” There are several bills moving through the legislature as well as initiatives that are attempting to revive aspects of redevelopment by restoring the ability of cities to use tax increment financing to secure funding for large public works projects and to strengthen local economies. The California Jobs and Education Development Initiative, or JEDI Act Mr. Maurer refers to, is one of many.
Mr. Maurer describes redevelopment as a form of “fiscal recklessness.” Perhaps he should tour the thousands of successful redevelopment projects that have promoted economic vitality, improved living conditions for lower income families, eradicated high crime areas, and provided parks, bikeways, playgrounds and new infrastructure for millions of California residents.
“Fiscal recklessness” is a term more directly applicable to the politically motivated spending habits of Sacramento. For years the California Legislature has habitually burdened tax payers with programs that we cannot afford to sustain, resulting in massive debt. This year, we have a small surplus. Common sense would dictate that we use it to pay down our existing debt and put the rest aside for the next time we incur a budget deficit. Has Sacramento learned its’ lesson, or should cities once again brace for the next robbery attempt?