California Redevelopment - Release: 3-26-2014
Will California Revive Redevelopment Agencies?
Eminent Domain Abuse Could Come Back to California, Along With Mountains of Debt
WEB RELEASE: March 26, 2014
CONTACT: Nico Perrino, (703) 682-9320 ext. 254
Sacramento, Calif.—Will an old law that threatened private property and encouraged fiscal irresponsibility be returning to California? A new statewide initiative seeks to resurrect a California law that enabled unelected governmental agencies to use eminent domain to take homes and businesses and transfer them to private developers.
The California Jobs and Education Development Initiative, or JEDI, Act would reestablish California’s Community Redevelopment Law (CRL) and give municipalities the power to revive the 425 redevelopment agencies the CRL created. In 2011, Governor Jerry Brown and the state legislature repealed the law and abolished the powerful redevelopment agencies, which were infamous for corruption, exploitation and for exacerbating California’s fiscal problems.
“Redevelopment in California had nothing to do with creating jobs or improving education,” said Bill Maurer, an attorney with the Institute for Justice and the executive director of its Washington chapter. “Resurrecting it would endanger private property and undermine the state’s fiscal stability.”
Bringing back California’s redevelopment system would mean that small businesses and many perfectly fine homes could be taken from their owners. The CRL allowed redevelopment agencies with few restrictions to use an expansive definition of “blight” to condemn private property and give it to politically-connected developers and corporations. Under the JEDI Act, an area would show signs of blight if unemployment rates in the area exceed the national average. Under this definition, the entire state shows signs of blight.
“California property owners were finally able to rest easy once the Governor did away with redevelopment agencies in 2011,” said Senator Jim Nielsen, the founding board chair of the California Alliance to Protect Private Property Rights. “Reviving this system again exposes homes, small businesses and places of worship to eminent domain abuse.”
Prior to being dissolved in 2011, redevelopment agencies turned California into one of the worst states in the nation for eminent domain abuse. Tens of thousands of acres of property were declared blighted and subject to condemnation. Those displaced were often poor minorities and the elderly.
In one high-profile example of redevelopment abuse, a youth center in a predominantly Hispanic suburb of San Diego was said to be “blighted” after the city decided it wanted to build luxury condos on the center’s land. The center challenged the blight designation in state court with help from the Institute for Justice and won. But many were not so lucky—because the cost and difficulty of challenging a blight designation was so high, few could afford it.
There were other harms associated with California’s redevelopment law. Not only did the law enable governmental agencies to replace existing property owners with wealthier ones, it also encouraged them to acquire huge debts, all the while reducing the funds available for important government services like schools and police stations. The law said a redevelopment agency could only receive property tax revenue from its redevelopment area if it went into debt. By 2011, the long-term debt of the agencies stood at $29.8 billion and their share of total statewide property taxes grew to 12 percent.
“If passed, JEDI would be one of the most significant expansions of government power in decades,” said Maurer. “It would divert money from schools and community colleges and give it to unelected governmental agencies and their politically connected business allies. The Governor and the state legislature were right to end this system in 2011.”
Founded in 1991, the Virginia-based Institute for Justice is the national law firm for liberty. For more information on this issue, visit ij.org/california-redevelopment.