What do the Cities of San Bernadino, Mammoth Lakes, & Stockton have in common? All three cities follow RDA and the League of California Cities, all circumvented AB26, and all three went bankrupt within a year.
Tax revenue is collected for the basic needs and services of the community, not to fund the private sector. The League of California Cities and the RDA Association are not on the side of the people. They are lobbyist groups who's purpose is to divert money to themselves and their affiliates.
In 1945 California authorized Redevelopment Agencies (RDA's) to alleviate urban blight. Blight is defined by state law as a combination of physical and economic conditions – vacant buildings, declining property values, poverty, high crime rate – that would prevent private enterprise from developing the area.
In the beginning very few cities used RDA, now most California cities not only use but abuse RDA. Half of California cities claim between 11-30% blight and 20% of cities claim over 30% blight to acquire land for RDA. The entire city of Imperial Beach has been declared blight. Imperial Beach is 1 ½ miles of beach-front property in Southern California; Does that sound 'blight' to you?
Powers of RDA:
Eminent Domain – Once an area is declared blight the city has the right to exercise the powers of eminent domain. The League of California Cities considers the powers of eminent domain an 'important tool' and encourages city officials to declare areas of their city blight to obtain eminent domain powers.
Take Out Loans & Issue Bonds without Voter Approval – RDA's use a federal Community Development Block Grant to start a project, but the remainder of the funding comes from issuing debt. By declaring a city blight the city is able to side-step Prop 13 to take out loans and issue bonds without voter approval.
Funding of RDA:
RDA gives the impression that the money is from state or federal grants, but 97% of all RDA finances are funded by the city. RDAs receive the federal Community Development Block Grant (CDBG) to begin work, but all redevelopment activity is financed by taking out loans that the city backs with future property taxes.
Tax Increment Financing: When Prop 13 passed RDAs feared a limited money stream, so they lobbied for special property tax revenues. After an RDA area has been established all property tax increases – less 2% for inflation – goes entirely to RDA instead of being used for the basic needs of the city. In the case of Imperial Beach all of IB is declared blight so ALL property tax increases go to the RDA program. The payments to RDA last as long as there is debt outstanding, and RDAs no longer have plans to conclude their projects, so eminent domain remains on the properties.
Cost of RDAs:
We can see the results of RDAs in the bankruptcies of Stockton, San Bernadino, and Mammoth Lakes. RDA eats up $1.5 billion/year of our cities budgets in the State of California. The financial records of Imperial Beach shows the actual costs of RDA on a city.
97% of all RDA funding is from the city itself. Taxes are collected for the general needs of the community, not to fund the private sector. Originally an RDA project took about 2% of a city's budget, now RDAs are swallowing up to 30% of city budgets.
The bigger problem is that the cities are spending even more on RDA than they are acknowledging. Imperial Beach's RDA is 32% of the budget, but I also found $4 million spent on RDA that is being funneled through 'dump accounts'. The budgets of numerous city departments have 'ABC' accounts listed with their expenditures. The ABC accounts pad the departments' budget by as much as 25%. The ABC accounts on the IB Fire Department's $2.3 million budget is $450,000 – 19% of their budget is being padded with RDA costs and legal fees.
Legal Fees:
Google 'RDA' and you'll find dozens of lawsuits pending. The Imperial Beach Financial Report for the year ending 06/30/11 stated City Attorney Fees at $244,000 – but paid out over $500,000 defending RDA lawsuits. This year the City Attorney Fees are budgeted at $200,000, but have already spent $600,000. In 2011 the City of IB also cut two checks to the RDA Association to help pay for their legal fees.
Massive Payrolls:
Another similarity of every city that belongs to RDA and the League of California Cities is massive payrolls for the top elected and appointed officials. Mammoth Lakes has a population of 8,000 people yet the Comptrollers' 2010 report shows their City Manager's salary is $198,533; Assistant City Manager at $186,358; and Exec Assistant to the City Manager at $71,708; and Airport Director at $151,431.
What are the salaries of elected and appointed officials in the city of Imperial Beach? That is information the City refuses to disclose. The new budget shows the City Council and Appointed City Officials shifted half of their payrolls to RDA accounts to avoid the State Wage Limits. City elected and appointed officials are giving themselves multiple titles to double dip wages.
How To Tell If Your City Is RDA? Simply look at the City Council Agenda.
“..JOINT REGULAR MEETING OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY, MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE SUCCESSOR HOUSING AGENCY TO THE REDEVELOPMENT AGENCY, AND MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE HOUSING AUTHORITY ..”
The Mayor and Council are hired to oversee the affairs of the City Employees and finances. It is a conflict of interest for council to belong to lobbyist organizations and to use tax payer dollars to fund lobbyists. 'Successor' RDA agencies are RDA on steroids. Their purpose is to shift as much money as possible from the city general fund to RDA regardless of the harm done to the city.
Our government functions on a system of checks and balances, but when city elected and appointed officials conspire together we have lost balance.
The League of California Cities lobbies every branch of city government. Their website lists departments for council, city managers, city attorneys, finance, city clerks, fire, police, & public works. The League nurtures a mentality in city officials that circumventing laws and putting their cities in debt with unnecessary construction projects and massive salaries is acceptable.
Circumventing wage laws and burdening cities with massive debt from unnecessary construction projects can no longer be acceptable in our State. We must close down RDAs and remove any elected or appointed officials associated with lobbyist organizations. Government officials are paid to work for the people, not to conspire against us.
How, exactly, did these or any city “circumvent AB26”? ABx1 26, challenged and upheld by the courts, dissolved all redevelopment agencies in California. There is no “circumventing” the law, with the exception of enforceable obligations approved by the Agencies’ appointed successor Agency, Oversite Board AND the draconian Department of Finance, Redevelopment Agencies are done, there is no “circumventing.”
The City of Mammoth Lakes filed for bankruptcy because it lost a $43 million dollar breach of contract judgment brought by a developer. “The town gave the developer the rights to build a hotel, residential and retail project near the local airport in exchange for making airport improvements. But the town backed out of the deal after the Federal Aviation Administration, which provided Mammoth Lakes with grants to improve the airport, objected to development nearby. The developer sued in 2006 for breach of contract and was eventually awarded a $30 million judgment. The town exhausted its legal appeals last year, and the amount has grown to $43 million.” While RDA funds may have been involved, Mammoth Lakes is going bankrupt because they rushed into development agreements without doing proper due diligence.
Too many areas in this post to refute, gonna stop here.
after ab26 passed cities ran up rda debt 'before it was too late'....our city gave out 'clean and green' grants....doesn't that sound nice? ....up to $30,000 in energy efficient windows and appliances... .. the city promoted clean and green as a 'grant', but the city took out loans promised with future tax revenue ....and put liens on the homes until the debt is paid... so let's review oh obrien; the city has liens on their homes, eminent domain, and is on the verge of bankruptcy.......that's a high price to pay for a water heater...
i posted this article all over the state because it's a state issue.. the 'biggie' is that there's been a $2 million/year difference for the past two years between the payroll checks ratified by council and the payroll report ... i didn't go out looking for rda... like most in cali, i had no idea what rda actually was or what the effects were on our cities' economy until i saw it in the audit... rda became lost in politics, but we the people must join together as a community and state and stop letting our cities and state from further ruination...
Why I wonder?
i audited the fire department in imperial beach....their budget for next year is $800,000 over-stated than what they spent in the last fiscal year - 39% of their budget is padded with rda and legal fees.... blaming the line worker is a farce...the line worker doesn't have the power or access to give themselves anything - they only get what their given... there's a story about to break in the san diego tribune ...for the past two years the payroll report is $2 million more than the checks ratified by council......it's not the line worker or union stuffing and extra $2 mil/yr in their pockets...
I haven't done the research, but I question your focus on RDAa versus public sector comp/pensions. In the case of RDAs, apart from extreme cases, the problem can be contained and worked down over time as the economy grows and the tax base firms up. The pension problem, in contrast, is compounded and deepening daily.
i agree, and it's also the problem with rdas'......and city attorneys....i called the cali bar ass to check extra laws and governance over city attorneys - there are none.... if we executed our elected and appointed officials like they do in some countries our governments would be running like well oiled machines...
i'm not focused on rdas.....i've been auditing the city of imperial beach for a couple months...this is the 8th article i've written about the audit....there's been various levels of corruption, but i've found rda is a state-wide problem, so i've published it state-wide... in the last fiscal year the city employees insurance costs- union, non, and council - totaled $263,501.54. the union checks for the city and fire dept totals $40,000...These totals come from the Accounts Payable reports, so this is the total that was paid out - part of the money comes out of the employees' pockets... to compare that number...our city attorneys are budgeted at $205,000, but they've run up $600,000 in legal fees in the last fiscal year. $400,000 pays for everyone's health care, union dues, and anything the line could possibly waste money on...if you want to consider health care a 'waste'.... i, like most people didn't really pay any attention to rdas when they were in the news a couple years ago...what i have learned since being published state wide is that this is an issue that ron paul has tried to address... we as a community and state have to realize that the dems and gop are on the same side....their side...the league and rda are non-partisan....they all join hands and walk through the door together......and think up ways to funnel tax payer money...
Not judging. Just curious.
'opine financial statements'...that's a gaap audit....they check 'standards'...and issue 'opinions'...the gaap audits for imperial beach all have warnings like 'material misstatements' listed in their audits.....if the private sectors see that on their report they would call for an internal audit of their employees... ..this is an internal audit ....as i told council: " this city is my company and i am here to audit my books.''
I think you should note that IB's RDA Ordinance 2011-1121 was passed in 7/20 2011. This was right after Brown announced he was dissolving all RDAs in the State. There was a companion Bill, AB27, under which RDAs that wished to stay in business were required to make a voluntary payment to the State of $X, an amount derived from a formula based upon the Agency's revenues. In 2012, the Courts upheld AB1x 26 and struck down AB27, effectively dissolving all redevelopment agencies in California.This ordinance you are concerned about is out of date and was simply reactionary to the first hint that redevelopment in California was being dissolved. There is NO WAY to circumvent AB1x 26. If a Successor Agency withholds forwarding its required tax increment payment to the State, the State is going to withhold said City's sales tax revenues. (or maybe VLF revenues, I forget which) I do not know many City's who are willing to play chicken with the Department of Finance. The DOF holds the purse strings.
There was recent audit in Oakland (let's go to the known sources of bad government first right?). They discovered that most of the Fed/State RDA money had been squandered on staff and police/fire expenses and salary. Almost none of it actually made it to the businesses and projects it was intended. Since the RDA funds have ceased distribution for the most part, cities are now firing staff and cutting services since they had been basically misappropriating the money for years!! Us in the development business hav known this for years.If you try and get entitlements in cities in California now , you may have a more laborious and difficult, expensive process because their is NO STAFF on the payroll now. They are all outsourcing to private planning/engineering firms. Not a bad way to go from a capitalistic and efficient use of money. But the process is now sort of broken. Government is absolutely broken and needs starvation to weed out the vermin and reduce the overhead.
If you have a list of RDAs that issued new bonds after July 2011, that would be interesting to see. As to you "clean and green grants" and their accompanying liens on the homes of recipients, the lien is just good business sense. No one twisted the arms of grant recipients to take the money. A lien on the property is a way of ensuring that the City or Agency, whomever granted the money, gets its money back in the event of a default. If the City/Agency did not make attempts to recoup their money, you would be railing about how the City/Agency "just gave taxpayers' money away."
I simply hate that a good economic tool, a tool that gave poor communities the ability to attract development, a tool that funded affordable housing, a tool that was not perfect but definitely, if used wisely and judiciously helped build local economies, is being vilified. Was it perfect no, did it provide opportunity, yes...just look at Oakland's downtown area. That rejuvenation was made possible by redevelopment. It is unfortunate that a good tool was misused by the elected and appointed officials.
From the IB website. "On January 5, 2012, the City Council adopted Resolution No. 2012-7136 electing for the City to serve as the successor agency to the Agency upon the dissolution of the Agency under AB 26 (“Successor Agency”). Under AB 26 the Successor Agency is obligated to perform certain powers and duties, including but not limited to, making payments and performing obligations required by enforceable obligations and expeditiously winding down the affairs of the former Redevelopment Agency.
and they are non-partisan...both sides join hands because they are on the same side, but it's not our side obrien....it's their side... what i've found out since posting this state wide is that ron paul has tried to address this issue..... the private sector will prosper if the cities would lower regulations and restrictions..
Not sure how city attorneys are getting the blame here.
Oh OBrien 4:56 pm on Wednesday, August 15, 2012 Because this is not an article that was researched and fact checked, it is a blog posting posted by someone with little to know knowledge of redevelopment agencies or municipal finance. Public employee compensation is only one component of the problem...and in many cases not the biggest component.
"Our side" as you label it is highly subjective. I am not comfortable being on the side of the misinformed.
If there is financial mismanagement in your City/Agency, that is an internal accounting problem, not an RDA funding problem. The following is not meant as critical: To improve your education and understanding, I would recommended that you purchase "Guide to Local Government Finance in California" by Michael Coleman et al. (Essentially public finance 101, yes, published by the League but highly comprehensive), read the full text of AB1484 and AB 1x26 and perhaps study the California Health and Safety Code (I think RDA info is in the 30000 area of the code) also, the GFOA has a handy little book called "Financial Policies." This way you will have a better grasp on the subject matter, which as a "masters' in administration" I am sure you can appreciate. You obviously feel very strongly about public finance and having a more technical grasp of the topic will only help you strengthen your argument.