Lawsuits Hit Downey Over New Redevelopment Areas

It seemed like clear sailing when the City Council approved more than 400 acres for redevelopment in July, after bowing to strong public pressure not to allow property to be condemned for new projects.

Since then, however, the city has been hit with three lawsuits seeking to invalidate the new redevelopment areas.

In the latest two lawsuits, Los Angeles County alleges that Downey illegally established the redevelopment areas “solely to obtain tax . . . revenue” to subsidize private development and pay for public improvements the city should pay for on its own.

Negotiations Under Way

Downey officials say the county sued only to receive a portion of the millions of dollars in additional tax revenue that would be generated by the new redevelopment areas. Without an agreement, which is being negotiated, Downey’s redevelopment agency would receive all the revenue for redevelopment.

The most recent negotiating session took place last Friday. Brice Russell, Downey redevelopment consultant, said city and county lawyers are working now on the final language of an agreement developed in that meeting.

“We believe we have an agreement that we are not embarrassed to take to our respective boards (the Downey City Council and the county Board of Supervisors), but we’re not sure our boards will approve them,” Russell said.

Russell declined to comment on the details of the agreement, and Deputy County Counsel Paula A. Snyder also declined comment, citing the pending litigation.

An agreement to share revenue would settle the county lawsuits, said Jim Cutts, Downey’s director of community development.

305 Acres Added

The legal challenges were sparked when the City Council approved two new redevelopment areas last summer. The council added 305 acres to its existing 125-acre redevelopment district along Firestone Boulevard, Downey’s commercial hub. And it created the so-called Woodruff Industrial Project, a separate 118-acre redevelopment district that straddles Woodruff Avenue on the city’s industrial eastside.

The most visible opposition to the new zones came from business and property owners who feared they could be forced to move or sell if the Downey Redevelopment Agency were given the power of eminent domain.

A reluctant City Council eventually decided to deny the redevelopment agency one of its strongest tools. At the time, Cutts advised the council that the city could successfully complete at least some projects without condemnation powers. He said it was better to go ahead without condemnation powers than to face the type of legal challenge that has kept a 1984 redevelopment plan tied up in court.

But on Sept. 15, Lois Du Lac, who owns a cluster of small industrial buildings in the Woodruff district, filed suit in Superior Court, alleging that the area is not blighted. State law requires an area to be blighted before government intervention can be used to stimulate redevelopment.

County to Lose Revenue

The county filed its two Superior Court lawsuits Sept. 18, contending that it will have to reduce public services because it will lose revenue in the new redevelopment areas.

When a redevelopment district is formed, additional property taxes generated from improvements in the area are diverted to the redevelopment agency, which then uses that money to promote redevelopment by financing public improvements, providing developers with discounts on land prices and other incentives.

Like Du Lac, the county alleges that Downey improperly characterized the redevelopment areas as blighted. The areas do not have a “preponderance of deteriorating structures (where people) . . . are subjected to physical dangers or health hazards,” the lawsuits said.

The county lawsuits also contend that the areas are developing on their own and are “experiencing normal economic activity.” The county would have received additional property tax money from the developing areas if the redevelopment districts had not been established, the suits contend.

“The sole purpose of the project is not to correct conditions of blight within the added project area(s), but rather to accommodate local property owners, to subsidize private development in an area which has and is already developing privately, and to finance improvements which should be paid for by the city from its revenues, or through other means, such as assessment districts,” the lawsuits said.