Overmalled, Underschooled

California is blessed with 5,500 shopping centers--about 20 square feet of retail space for every person in the state, and much of that space sits vacant. Meanwhile, we stuff California’s 5.5 million public school students into overcrowded classrooms and into ever-present portables jammed onto sites that once held playgrounds, athletic fields and parking lots.

We need more classrooms and fewer stores, more schools and fewer shopping centers.

Why, then, are we spending public money to build shopping centers instead of schools?

“We” are California’s 350 community redevelopment agencies--public agencies that are building shopping centers and superstores with money that should have gone to public schools.

California’s redevelopment agencies, conceived during the urban renewal heydays of the early 1950s, were meant to “wage war on urban blight.” But what started as a war against blight has mutated into a war between cities for sales tax revenues.

Redevelopment agencies undermine the ability of school districts to finance new schools. The reason is very simple: Unlike school districts, redevelopment agencies do not need voter approval to issue bonds. In most communities, redevelopment agencies can issue bonds upon the vote of three or four agency directors; school districts need the approval of two-thirds of the voters (look at Los Angeles’ experience last month: a $2.4-billion school bond issue failed by a fraction of a percentage, getting 65.7% approval).

Redevelopment agencies can easily access the municipal bond markets; school districts cannot. This painful fact has so distorted public finances in California that redevelopment agencies throughout the state today owe more than $10 billion--an amount greater than five times the total bonded debt of our state’s 1,000 school districts.

The priority access that redevelopment agencies have to the credit markets is not the end of the story: After an agency issues bonds, redevelopment law permits agencies to repay their debt with property taxes diverted from local schools. Again, a perverse situation and a staggering amount of money: Every year, redevelopment agencies take about $750 million in property-tax revenues from local schools.

I am particularly sensitive to this perverse state of affairs, since I am both a developer and a school board trustee. I have attended meetings of my trade association of retail developers during which perky officials from local redevelopment agencies offer public subsidies worth millions of dollars to entice us to build shopping centers in their communities. Later, I’ll attend my school board meeting and listen to somber consultants deliver the grim message that two-thirds of the voters are unlikely to approve bonds to pay for the high school and two elementary schools that our kids desperately need.

Are redevelopment agency directors really such villains that they would intentionally impoverish their local schools? Not really, because agency directors know that the state will not allow any school district to remain impoverished, and that the state will attempt to fill in whatever redevelopment agencies take from local schools. One of our county redevelopment agency directors put the matter succinctly when she said, before approving another agency bond, “This doesn’t hurt our schools, and besides, if we don’t take the money, L.A. will.” She could have been speaking for redevelopment agency directors throughout the state. Unfortunately, this beggar-thy-neighbor attitude is breaking education in our state.

The way we publicly finance schools and shopping centers in California must change. Many people believe that we need to make it easier to pass school bonds; that may be true, but before we even talk about lowering the two-thirds barrier, let’s talk about raising the necessary voter approval for redevelopment bonds above zero.

We need to change the law so that redevelopment agencies, like school districts and other public agencies, must obtain voter approval before selling bonds. Until then, someone needs to tell the state’s 350 redevelopment agencies that as far as government is concerned, the key to economic development in California isn’t more shopping centers--it’s better schools.

‘Someone needs to tell the state’s 350 redevelopment agencies that . . . the key to economic development in California isn’t more shopping centers--it’s better schools.’