The Alhambra Redevelopment Agency, which has partnered with developers to build numerous retail and mixed-use complexes, has grown to be the envy of other local, cash-strapped governments. Indeed, over the past two decades, the ARA has grown into a mini-empire for Alhambra’s local government. Along the way the resulting tax increment revenues went to further feed the ARA which were then put towards the purchase of more property, cash incentives to lure more developers, and salaries for ARA staff who also happen to be city employees.
The point we need to consider is whether Alhambra contributed to recent actions taken by Governor Brown to abolish redevelopment agencies. Given that the main charters of such agencies are to cure blight and provide affordable housing, I would have to say yes we did.For example, the Alhambra City Manager is compensated $69,500 a year from the ARA since he also serves as its executive director. This is a significant portion of his total compensation of $278,000. In terms of financial incentives to aid businesses, the ARA provided $425,000 in assistance to the owners of 38 Degrees Bar and Grill. And it plans $552,000 in assistance to Babies ‘R Us next year. The list goes on.
Taking the above examples, 38 Degrees Bar and Grill was formerly occupied by the newly renovated California Brewing Company, and Babies ‘R Us is part of the existing Freemont Plaza, both of which are far from being blighted. And the transferring of significant amounts of city staff salaries to the ARA comes at the expense of taking tax revenues from other regional and state programs. These parochial actions, when taken together across many redevelopment agencies, have no doubt contributed to the state’s financial crisis.
Even from the isolationist viewpoint, the tangible fruits of the ARA’s efforts are questionable. Some residents are thrilled with the availability of the new shopping and restaurant options. Others who are less thrilled cite the lack of planning, quality of life impacts, and lack of affordable housing. And there’s the classic argument about whether such development would have happened anyway without paying out so much incentives to developers. Case in point is when in 1997 Alhambra offered Starbucks $136,000 in direct payment in addition to reduced rent to open up one of its ubiquitous coffee houses.
The other criticism cited by non-partisan studies is that redevelopment agencies only shift economic activity and do not significantly add to overall revenue and jobs. We continue to throw good money after bad. The ARA has concentrated on a piecemeal, tactical plan that is often based on the ideas of a close circle of individuals: staff, developers they team with, and their architects. Sole proprietorships are encouraged to open one year, only to be decimated by the big-box store down the street in the next. As businesses go under, the ARA continues to throw money at them in an effort to bring in more of the same. Meanwhile, many businesses outside of the designated redevelopment zones such as those on Valley Blvd. continue to thrive even without cash incentives to business owners.
The core of the problem is not too much development. It’s that there’s been too little. Development is more than throwing money at something, even if it is coming from other sources (read: it is NOT ok to build a Gateway Arch just because you have grant money to do it).
Governor Brown’s proposal to eliminate redevelopment agencies is especially pertinent to Alhambra. What we’ve done with redevelopment funding is not consistent with its mission. What the Governor’s proposal offers is a return to local control. It will attempt, via constitutional amendment, to return the decisions for large developments back to the citizens by requiring a 55 percent majority vote. Hopefully, a compromise will be reached. Based on the experiences in Alhambra, I would offer the following suggestions for a state-wide reformation:
1. Establish a regional board that adjudicates the deeming of blighted areas. A regional entity offers the best chance at a fair determination of blight. It can compare different cities and get help to those areas most in need.
2. Establish a regional board to aid cities with redevelopment administration and tax increment financing. Many cities suffer from a lack of knowledge on how to establish and use redevelopment agencies. A regional board would level the playing field across cities and set strict limits on overhead expenses.
3. Increase the set-aside for affordable housing from 20 percent to 30 percent. The money saved by limiting the overhead costs and salaries charged to a city’s redevelopment agency should be put toward affordable housing.
4. Go forward with proposing a constitutional amendment to allow local voters to approve tax increases and bonds for economic development purposes with a 55 percent majority.
Such reforms, for all practical purposes, would effectively end the ARA as we know it. But that may not be such a bad thing.
Eric Sunada is the executive director of the San Gabriel Valley Oversight Group. A longer version of this article can be found on the organization's website.