The California Supreme Court’s 7-0 decision last month upheld Gov. Jerry Brown’s plan to restructure redevelopment agencies and restore diverted funding to education and public safety. It’s long overdue, despite the crying and gnashing of teeth by numerous beneficiaries and self-serving sycophants.
Redevelopment agencies have been a significant source for redistributing wealth to the already wealthy. The biggest funding abuse has been to sports teams, convention centers, auto parks and big box merchandisers, where those who pay and those who benefit are different people. Sometimes “redevelopment” in other areas has been accomplished by condemning non-taxable church property and gifting to sales-tax-generating businesses.
Additional sob stories come from so-called “affordable housing” advocates, whose primary interest seems always to build Taj Mahals through huge housing empires with huge budgets in the least effective way to overcome San Diego politicians’ perennial war on housing. Susan Riggs Tinsky of the Housing Federation wrote in The San Diego Union-Tribune on Dec. 30, 2011, that 83,000 local families are currently on the waiting lists for affordable housing. Before the government interfered, there were no waiting lists.
Recent politicians have made things so difficult to build anything in San Diego that the San Diego Airport; Marine Corps Recruit Depot; the former Naval Training Center; Fashion Valley (on wetlands); and much of the housing in La Jolla, Point Loma, Del Cerro and Mount Helix could not legally be built today (hillside overlay and endangered habitat). The Encina, Silvergate and South Bay power plants also could not have been built, as well as National Steel and Shipbuilding Co., which if not built would have impoverished all San Diego.
To compensate for their counterproductive foolishness, politicians support expedited development only in downtown San Diego and enormously expensive “affordable housing” projects, so expensive only the subsidized poor can afford to live in them.
California's 60-year-old Redevelopment Law was a laudable, well-intentioned device for eliminating "blight." We're all aware of the run-down areas of many cities, depressingly riddled with graffiti and crime and desperately in need of revitalization. But many of us wonder how deserts, golf courses, national forest enclaves and Ferrari dealerships could be defined as blight. The governor is right to abolish California's redevelopment agencies.
What's seen, what's unseen
Petco Park is seen as a popular redevelopment success. What's unseen: The Padres pay less than 10 percent of their $17 million annual operating expense. Other ballparks, not having to pay the full cost of the stadiums, enables the teams to pay $5 million to $20 million annual player salaries while adding up to $100 million to the team owners’ net worths, according to consultants.
Also unseen are the taxes that would have been generated for the city, schools, libraries, police, courts and county health services that would have benefited San Diego residents who don't live downtown. With the court’s decision, these taxes will now revert to their historical uses.
Redevelopment till now has required an "affordable" housing element. This has resulted in the government providing from $337,000 to nearly $500,000 new low-income apartments (2.5 to four times the price of existing apartments), often resulting in more affordable units destroyed than created. The new permanent homeless shelter downtown, former World Trade Center, is costing more than $450,000 per room, according to news reports.
Demanding brand-new affordable housing in redevelopment areas costing more than $337,000 per unit is akin to demanding Mercedes-Benz to sell 20 percent of its new cars to people who can't afford them. In 2010, 18,228 “used” or previously occupied apartments sold countywide at a median price of $110,664. Just one of many reasons so many Americans think the government is on the wrong track. What’s wrong with a used car or used house for people with limited education, limited work experience and limited income? It is a question needing an answer.
In 30 years, not a single person has been able to explain why poor people, many without a high school diploma and who self-report to the census they can’t speak English, are entitled to enjoy the most expensive consumer product in society — a brand-new home or apartment. Or why housing for the poor should cost more than triple the housing occupied by most self-supporting renters.
According to a University of Michigan study, "New Homes and Poor People," the construction of 1,000 new dwelling units, both homes and apartments, makes it possible for 3,545 households to move to better accommodations. Of the 3,545 moves surveyed, 1,290 were by low- and moderate-income families. This is the essence of upward mobility. Anyone who didn’t move to a brand-new house when they left their parents' home or graduated from college knows how the housing market works. Used housing is “affordable housing.”
Not all used housing is affordable, of course, but the private market supplies far more housing for low-income people than government programs. It just isn’t the most expensive, brand-new housing. Affordable housing lobbyists, if serious, would testify in favor of every proposed housing project in the county, even those without a so-called “affordable element,” if they honestly wanted to help low-income people.
Where to now for deteriorating areas?
Greenlining, aka enterprise zones, is an alternative to government redevelopment. Upon designating an area depressed, all planning controls would be relaxed except for health, safety and pollution standards. City councils should be required to dispose of all vacant or abandoned property in their ownership, to be auctioned to the highest competitive bidder in the open market. New developments would be exempt from rent, wage or price controls. Businesses migrating to the areas would enjoy reduced property taxes and no capital gains taxes if held for five years, while being prohibited from accepting other government grants or subsidies. Enterprise zones could be used only for the purpose of replacing blight — and not larded up with the usual impossible jobs and social programs.
The concept originated in Great Britain by professor Peter Hall, a noted socialist, and Sir Geoffrey Howe, a Thatcher conservative. The objective: to eliminate government-imposed economic disincentives to private investment. We all want a better environment where profitable, free market entrepreneurs can produce a better environment by providing goods and services desired by consumers. After all, more than 90 percent of this country was developed privately, including many once depressed areas.
By creating an economic climate in which taxes and the cost of doing business are reduced, the opportunities for profits increase, and profits induce businesses to go into deteriorating areas without a massive influx of public funds.
Schnaubelt, president of Citizens for Private Property Rights, has been a commercial real estate broker for 35 years and was a San Diego city councilman from 1977 to 1981.