Blight Makes Right for Cities Short of Funds

The neighboring Orange County cities of Stanton and Westminster are set to become the first in the state to take an old tactic to a new extreme--raising revenues by declaring virtually their entire towns “blighted” redevelopment zones.

Instead of using redevelopment to restore dying city centers, officials in Stanton and Westminster voted Wednesday night to designate their cities redevelopment areas in an effort to keep hundreds of millions in extra tax dollars over the next 30 years. Stanton and Westminster officials say they’ll use most of the new revenue to rebuild roads, sewers and housing.

Westminster spokesman Mark Brewer said it was the only way his city could pay for necessary improvements to its aging infrastructure without raising taxes.

“The word we got [from residents] was, ‘We don’t want to pay anything more,’ and this was the only way we could get more money,” Brewer said.

State redevelopment experts said the two cities are the only places in the state where such huge swaths of land have been declared blighted since the law was changed in 1993 to tighten loopholes and prevent cities from putting previously undeveloped land into project areas.

Peter Detwiler, staff director of the state Senate Local Government Committee and a redevelopment expert, called the cities’ concept laudable, but wondered whether the emphasis on improving housing stock was economically sound.

“They key is: Can they pencil it out?” Detwiler said. “People usually think housing is a fiscal loser that consumes more in services than it generates in municipal revenue.”

The object of most redevelopment efforts across the nation has been to entice industry and large retailers into town, adding sales and property tax revenue to city treasuries and creating jobs.

But cities also receive a greater share of property taxes from redevelopment zones.

For example, in 1995-96, 11 cents of each regular property tax dollar was returned to Orange County cities. But they got back about 65 cents of each dollar from tax increases in redevelopment zones, said Michael Dardia, a research fellow at the Public Policy Institute in San Francisco.

Local officials insist it’s a coincidence that the Orange County cities are trying this tactic at the same time.

“Westminster and Stanton each began independently and unbeknownst to the other,” said Don Anderson, Westminster’s community development director. “It’s permitted. We’re comfortable with it. It’s not something that we see as unusual or out of the ordinary.”

Westminster officials say designating the city as a redevelopment zone will give them the money to rebuild the infrastructure over the next 30 years. “We didn’t have any foreseeable way of capturing those funds,” Brewer said.

Westminster projects the designation would mean $606,000 in extra revenue in just the first year of redevelopment, and a total of $857 million over 30 years.

Stanton expects to add $144 million over 30 years.

Both cities also hope the planned improvements will attract more commercial development, which in turn will net additional property and sales taxes.

For now at least, no one seems offended at having their cities officially declared rundown.

“When you say, Is it blighted? No,” said Stanton Councilman David Shawver. “Is it old? Yes, it is old. We’re trying to spruce ourselves up, that’s what we’re doing.”

Stanton certainly could use some help. The average selling price for a home there as of March 31 was $146,601, compared with $287,055 for the county as a whole, according to the Pacific West Assn. of Realtors.

The state redevelopment law was intended to make it easier to transform rundown areas of a city or county. Most commonly, a city council or board of supervisors, acting as a redevelopment agency, would buy a crazy quilt of properties and sell the land cheaply to a private owner to be developed as a revenue-producing shopping mall or industrial park. The law requires that 20% of redevelopment funds go toward low-income housing.

“The government can use this extraordinary power to take property from some people and sell it to others,” Detwiler said. “It’s a powerful and wonderful device that has changed the way California has looked over the past half-century.”

Stanton and Westminster officials have told residents they don’t intend to use the power of eminent domain to take property, only to garner more of any increase in property taxes, which was limited to 2% a year by Proposition 13.

Since the 1978 initiative limited property tax increases, cities in California have resorted to a variety of ways to raise revenue, including utility fees, hotel bed taxes and redevelopment projects.

About 80% of California cities now have redevelopment agencies. The bigger the city, the more likely it is to have one. Of the 58 cities in the state with a population of more than 100,000, all but one have a redevelopment agency. (Westminster has 86,248 residents, Stanton 33,853.)

Redevelopment zones aren’t new to Westminster and Stanton. A third of Westminster and 22% of Stanton already had that designation.

Stanton has been in the redevelopment business since 1983. Until now, City Manager Terry Matz said, the focus has been primarily on developing commercial areas, especially along Beach Boulevard. Redevelopment there, the city’s main thoroughfare, has resulted in new strip malls and landscaped street medians.

Before the Legislature tightened the law in 1993, many California cities--including Chico, Coronado, Huntington Park, Cathedral City, Emeryville and San Marcos--declared 70% or more of their land blighted, often creating redevelopment zones out of undeveloped land and areas that weren’t run down to begin with.

Experts say they can’t recall any city making a similar move since that time.

Matz said he was unaware he was a pioneer. “I don’t think this is an unusual use of redevelopment,” he said.

In fact, citizens have gone to court to fight redevelopment zoning. A state appeals court ruled in April that the city of Diamond Bar’s redevelopment zone didn’t qualify as a blighted area. A planned redevelopment zone in Mammoth Lakes is now being challenged in court.

No one as yet has formally challenged Stanton and Westminster’s plans, which have been the subject of public hearings for months.

The big loser would be Orange County, which would lose the tax dollars going to the redevelopment agencies. Charles Hulse, the county’s chief deputy auditor-controller, said that countywide, 6% of property taxes now goes to redevelopment agencies.

Asked if the growing number of projects worried him, he replied, “When you get to a whole city, it would. There’s always some concern when a redevelopment agency is formed.”

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Urban Hopes

Stanton and Westminster hope to raise new revenue by declaring virtually all of their towns “blighted” redevelopment zones. City officials say most of the new money will be used to rebuild roads, sewers and housing.

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Westminster Stanton Year incorporated: 1957 1956 Total population (1999): 86,248 33,853 Median household income: $48,582 $33,367 Square miles: 10.2 3 Residential area: 83% 43% Commercial area: 2.2% 12% Industrial: 0.3 11%

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Sources: U.S. Census, cities of Stanton and Westminster