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    News in Depth with Audio Coverage

    Extraordinary Joint Meeting Of Five State Legislative Committees Hears Testimony On Redevelopment/Eminent Domain

    State Legislative Analyst Office Says Redevelopment Likely Costing State Hundreds of Millions of Dollars Annually Without Serious State Oversight

    (Nov. 23, 2005) -- In a simultaneous meeting of five state legislative committees, CA lawmakers heard hours of testimony on Redevelopment/Eminent Domain sharply split between defenders of the system who said it's eliminated blight and critics who blasted the system as an abusive, unjust failure in need of state legislative reforms.

    The criticism was amplified by bombshell testimony from the non-partisan Legislative Analyst's Office which said Redevelopment is likely costing the state hundreds of millions of dollars a year in property taxes diverted from schools and counties with virtually no meaningful state oversight. posts a link to this report below.

    The joint informational hearing on Redevelopment Reform by the State Senate's Local Government and Transportation and Housing Committees, and the Assembly's Housing and Community Development, Local Government and Judiciary Committees was convened to consider possible changes to state law in the wake of this summer's controversial U.S. Supreme Court ruling (Kelo v. City of New London) which held (5-4) that the U.S. constitution lets local government take private property for private development that officials claim will produce public economic benefits.

    The Nov. 17 informational hearing was supposed to run from 9:30 a.m. to noon; instead it lasted past 3:00 p.m. posts salient audio excerpts (roughly 48 minutes) below.

    Unlike the Kelo case (which occurred in Connecticut), CA has an additional statutory requirement that Redevelopment can take place only after Redevelopment Agency officials declare the area "blighted." But the first witness, Orange County Supervisor (and former Fullerton City Councilman) Chris Norby, author of a treatise critical of Redevelopment (Redevelopment: the Unknown Government) dismissed the current "blight" requirements as "meaningless."

    Citing multiple examples of Redevelopment's use of eminent domain (the power to take private property after paying the property owner "fair" compensation) that produced arguably absurd and abusive outcomes, Supervisor Norby urged state lawmakers to make substantive changes to the Redevelopment process.

    In opening statements, some committee members said Redevelopment had produced benefits in their communities, a claim Supervisor Norby immediately challenged. If Redevelopment is really curing blight, Norby asked rhetorically, why has Redevelopment persisted for over half a century and is continuing to expand?

    Supervisor Norby went on to level the charge -- made on several occasions by LB activists locally -- that Redevelopment is causing blight in some urban areas. Norby also stated (without denial by pro-Redevelopment witnesses) that over one quarter of CA's urbanized land is now labelled "blighted" to trigger Redevelopment...including parts of one community whose residents' median annual income is roughly $250,000.

    Nearly half of LB has been declared "blighted" to trigger Redevelopment, a process effectively diverting property tax increases from the County and schools to repay bonds that pay developers to "redevelop" parts of project areas. Redevelopment was used (and continues to be) to create LB's elegant downtown, but other Redevelopment project areas in North and Central LB have yet to experience a renaissance of similar magnitude.

    A lawyer for the CA Redevelopment Association urged lawmakers to limit legislative changes so Redevelopment Agencies could retain "flexibility" and "local control." But Supervisor Norby reminded state lawmakers that Redevelopment Agencies are actually state agencies, triggered by local action but operating under state law. (In LB, that distinction is further masked because LB city staff simultaneously operate as staff for LB's Redevelopment Agency).

    In its written report (link below) and verbal testimony, the state Legislative Analyst's Office (LAO) said, "Californians pay over $33 billion in property taxes annually. These revenues help fund school, community college, city, county, special district, and redevelopment agency operations. Redevelopment’s share of property taxes has grown over time. Redevelopment receives about 10 percent of property taxes, over $3 billion annually. In Riverside and San Bernardino Counties, redevelopment agencies receive about one fourth of all property taxes paid." The LAO report continued:

    "To the extent that redevelopment shifts property tax revenues that otherwise would be allocated to K-14 education, redevelopment can increase state education costs. How much does redevelopment cost the state? The answer is not clear, but probably at least hundreds of millions of dollars annually," the LAO report said.

    When the LAO's witness testified to this sum verbally, some lawmakers could be heard off mike audibly reacting to the revelation.

    "Despite significant fiscal interest in redevelopment, no state agency regularly reviews proposed new project areas for compliance with state law." the LAO report said. "The Legislature gave the Department of Finance authority to challenge proposed redevelopment projects, but it has done so only once (Hemet 1992). The California Attorney General has broad authority to enforce state laws, but has used this independent authority to challenge local redevelopment projects only twice over the past two decades (City of Industry, 2001 and California City, 2005)."

    CA Redevelopment Association Executive Director John Shirey (a former LB Ass't City Mgr.) said his group doesn't oppose discussing removal of owner occupied homes from eminent domain proceedings (providing the property is appropriately zoned). Shirey blamed media accounts for fanning public fears over eminent domain since the Supreme Court's Kelo holding doesn't directly apply in CA because of the state's "blight" requirement.

    Mr. Shirey's position produced a verbal collision with State Senator Tom McClintock (R., Thousand Oaks) who blasted the argument as "sophistry."

    On multiple occasions during the proceeding, Senator McClintock compared Redevelopment's use of eminent domain to take private property for private development to legalized theft and robbery. Senator McClintock said the issue was Redevelopment's ability under current CA law to use eminent domain (or the threat of it) to take private property and give it to others for private gain.

    To view the report by the Legislative Analyst's Office, click State Oversight of Redevelopment (pdf).

    To view a staff briefing paper on changes that legislators may want to consider in state Redevelopment law (referenced by witnesses during the hearing), click "What Is To Be Done: Legislators Look At Redevelopment Reform" (pdf).

    To hear salient audio portions of the proceedings, recorded by from the committee internet webcast, turn your speakers on and click here. The audio is posted in the "real audio" format which should "stream" into your computer, avoiding lengthy downloads. The six hour proceeding has been reduced to roughly 48 minutes; edits are indicated by a "whoosh" sound (our version of an audio ellipsis). To launch the audio, click here.

    If you don't have the "real audio" playback unit, it can be downloaded free at: RealOne player download

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