The MORR we get together
Redevelopment financing is complex. Actually, it’s really complex. Toss in state, regional and local financing and you’ve got yourself a regular can of Chunky (is it a soup or a meal?).
So for me, it’s easy to look at things piece by piece. It also keeps you from having to read an extended overview of something that I could probably write 50 pages about and still just scratch the surface. Today, I’ll do the opposite. Let’s look at where the opposition to redevelopment is coming from. Because I disagree heartily with “Dave” when he writes that “Those folks are wrong on the details but are right in substance.” Unfortunately, an argument supported by bad facts falls apart.
Apparently it makes me wonky to want to understand an issue, rather than just blindly fly from my gut and accept any argument that’s made because it supports what I feel is right. That’s not who I am. Apparently, it is who Dave is.
The leaders of the Redevelopment-causes-all-evil attack cite one source, the “redevelopment: the unknown government” (RUG) a document so poorly written, it’s not even funny. For more one the extreme rightwingers who wrote it, you can visit salon.com. The Author, Chris Norby, is an uber-conservative from Orange County who is writing an ideological advocacy book, not a well sourced study of Redevelopment.
The report is full of generalities, anecdotes from redevelopment projects and areas gone bad and applies these specifics to all redevelopment. Which is like saying that some cops in LA beat Rodney King, therefore all cops are bad, therefore we should get rid of cops.
But beyond that, the report relies on bad information, or not exactly bad, it’s actually good information, they just use it (I’ll be generous here) disingenuously.
Case in Point:
In Chapter 7 (the chapters are barely a page long, seriously, ¼ of this document appears to be cartoons that make points), the report present “Table VI” which is incontrovertible proof that:
“cities without redevelopment either match or actually exceed those cities that do, in terms of personal income-growth.
There is no evidence to show that all the billions spent on redevelopment has done anything to improve the lives of people in those cities. There is no evidence that redevelopment is a positive factor in the elimination of blight.”
So what’s the proof? A table that compares per-capita personal income in Alameda to Benicia from 1979-1989. Alameda is a city with redevelopment, Benicia is not. Here’s the data:
| Bay Area: | ||||
| Status | City |
1979 |
1989 |
Growth |
|
|
||||
| NO Redevelopment | Benicia |
$9,312 |
$20,663 |
122% |
| HAS Redevelopment | Alameda |
$9,288 |
$19,833 |
114% |
The problem is, Alameda formed it’s redevelopment agency in 1983 and Marina Village was it’s first project (it’s other one was Independence Plaza). Marina Village wasn’t completed until after this time period. So while Alameda had a redevelopment agency, there was no redevelopment to speak of during this period of time. Even if we ignore the fact that these two cities are not similar in size, location or demographics. The numbers are meaningless. (Yes Dave, I mean meaningless).
Guess what, if you look at the period from 1989 - 2003, using the same methodology and numbers as the RUG report, Alameda not only keeps up with Benicia, it shows greater gains:
| Bay Area: | ||||
| Status | City |
1989 |
2000 |
Growth |
|
|
||||
| NO Redevelopment | Benicia |
$20,663 |
$31,226 |
151% |
| HAS Redevelopment | Alameda |
$19,833 |
$30,982 |
156% |
By the RUG reports own controvertible methodology, redevelopement has made all Alamedans better off!
Of course, the data is meaningless, the cities were obviously picked to make a point and no one is making the “redevelopment increased per capita income” argument. But this just goes to show you what lengths the holy grail of anti-redevelopment reports goes.
I’m going to write more about redevelopment and the big picture at another time (don’t worry Dave). With two editorials in today’s Alameda Journal both of which use this report as their basis (The Action Alameda website copies huge chunks of the RUG report for its content on redevelopment).
I guess it makes me wonky to think that arguments should actually be supported by facts. I welcome the introduction of more facts and information, perhaps a redevelopment summit/discussion amongst people who disagree but want to respectfully hash out
dave
February 22nd, 2008 at 10:08 am
Are you for public funds being used for private non-essential purposes?
Are you for tax dollars guaranteeing profits for private businesses?
Are you for massive public debt floated w/o a public vote?
Being for redevelopment means you are in favor of bad fiscal policy and bad public policy.
Is this the sort of public servant you aspire to be?
Lauren Do
February 22nd, 2008 at 11:49 am
Don’t our tax dollars guarantee profits for private business all the time? With government contracts and outsourcing — not everything is done internally within the bureaucracy that is city, county, state, federal governments.
Aren’t our public funds used for private non-essential purposes all the time depending on one’s perspective on what is non-essential? For example, most paratransit companies are private and I don’t use paratransit, does that mean that it is non-essential because it’s non-essential to me? And yet public funds are used to subsidize the service.
I don’t recall voting for this current president or going off into this war yet a massive public debt is being accrued in order to finance it.
Redevelopment, the way I see it, is a tool. There are bad examples and there are good examples, but to blanket it as bad fiscal and public policy without evidence that it has done any direct harm is as bad as being pro-Redevelopment without considering the possible repercussions of Redevelopment.
I don’t feel as though JKW is passing judgment on Redevelopment being good, but rather showing that the basis in which some would condemn Redevelopment is based on flawed assumptions.
I mean, come on, what does per capita income have to do with redevelopment? And even if it did have something to do with redevelopment comparing Benicia to Alameda is ridiculous, talk about apples and oranges. Its population is a fraction of Alameda’s and is a largely industrial city. Not comparable. And the other examples on that chart from the MORR document are equally flawed.
dave
February 22nd, 2008 at 12:23 pm
This is beginning to remind me of a math teacher who marked my correct answers wrong because I didn’t show my work.
Yes, the MORR, et al arguments JKW has presented are weak and contain several inaccuracies. While he’s getting his jollies punching down those strawmen, though, he is willfully missing the essential point: Rhetorcial weakness notwithstanding, their conclusions are correct:
-Redevelopment DOES take tax dollars away from public purposes, redirecting them to non-essential private ones.
-Redevelopment DOES reduce, even cripple, future fiscal flexibility.
—-
And random responses to the cloying sophistry of the rest of your post:
-Govt contracts for govt purposes are not the same thing as government funding for a movie theaters or strip centers. That’s not apples/oranges, that’s apples/anvils.
-Re: Bush/War — the war is not being funded under the table by redevelopment bonds, it’s being funded in the open by Congressionally authorized spending & debt sales. If you’d like to start a convo about Bush, the War & the federal budget, we can start a new thread, but the two are not even tangentially related.
-There are good examples of redevelopment finance? Name one. Explain why it’s so good.
Michael Krueger
February 22nd, 2008 at 12:31 pm
Dave, you seem eager to castigate others for a perceived lack of credibility, yet you have no qualms about making absolute statements like these:
Or, as you wrote in a comment elsewhere:
I have not heard Mr. Knox White or anyone else in Alameda claim that redevelopment is always good under all circumstances. How then, with a straight face, can you make the claim the redevelopment is always bad under all circumstances?
The evidence on redevelopment is mixed: Like most instruments of public policy, it can be good under some circumstances, and bad under others. It seems that the need to paint everything as black or white, good or evil is the approach that lacks credibility.
dave
February 22nd, 2008 at 12:58 pm
One way to counter my posts would be to cite examples of redevs that worked out counter to my position.
Can you name a redevelopment project that used tax dollars for an essential public purpose? Cuz, ya know, that’s what tax dollars are for.
But if you believe that tax dollars ought to be used for non-essentail private purposes, can you name a redevelopment project that generated sufficient revenue back to to its issuing city to A) cover the debt service B) compensate the city & its taxpayers for their risk?
Bringing it down to an Alameda level, which after all is the topic at hand, do you care to justify the use of public funds for a movie house?
Lauren Do
February 22nd, 2008 at 1:39 pm
In a UCLA study that has some highly critical opinions about redevelopment in general, there is a case study about the city of Burbank who decided that the role of their redevelopment agency was to eliminate economic blight. So they used their redevelopment funds in order to subsidize very large “big box” stores. According to the study:
The more interesting overarching theme of the study was the connection between the passage of Prop 13 and the proliferation of Redevelopment agencies as a way for cities to “take back” some of their lost property taxes through the power of Redevelopment agencies.
An “essential” public purpose is pretty subjective, if the redevelopment agency achieves its goal like Burbank of increasing sales tax revenue then couldn’t one argue that it is providing an “essential” public purpose? eg. bringing additional revenue into the City?
One could argue that the redevelopment monies being used to rehabilitate the Alameda Theater is going to an “essential” public purpose: the revitalization of a piece of Alameda’s history.
dave
February 22nd, 2008 at 2:36 pm
Does the study show whether the project recovered its debt service Did it generate an acceptable risk adjusted return?
And are you really saying that subsidizing Fry’s with tax dollars is an appropriate government function?
—-
As for the theater, you could argue that. It’s a terrible argument, but you can make it.
dave
February 25th, 2008 at 6:32 pm
Lauren:
So I read that UCLA report.
Regarding Best Buy, it currently averages sales of approx. ~30MM per store. That number was undoubtedly lower in ‘97, but even if it was 30MM then, Burbank’s 1% of the sales tax take was approx 300M per year. This does not come close to recouping the principal 3MM subsidy, as the study trumpets. Depending on terms, it probably covers the debt service on BBY’s portion of the project, but if BBY is the highlight, the project cannot be considered a financial success. Well, not for Burbank. It is a smashing success for Best Buy…
What did you think about the hotel developer being guaranteed a 12% profit before making any debt service payments? Is that sound fiscal policy? Did you notice that the project defaulted? Thoughts on that?
If this is the most positive redevelopment study you can find, you are damning it with very faint praise.
—————————————————–
John:
I detect bit of cyber-umbrage in your posts, but why? I did agree with you that MORR, et al had weak and downright inaccurate arguments. I simply said that these weaknesses do not cancel out their fundamental conclusions of redeveloment’s harmful effects. I’m still waiting for you to counter that, as you indicated you would.
As far working on my “gut” & disregarding the facts, I have actual experience in rdevelopment finance. I know first hand what a scam it is. What is your experience with it?
Stop, Drop and Roll » Toe-May-Toe / Toe-Mah-Toe
February 27th, 2008 at 8:59 am
[...] are plenty of studies and reports about redevelopment in California. One, and seriously it’s only one, tries to “prove” that redevelopment has no redeeming value across the board. So [...]