A Proper Rein on Redevelopment

In three recent cases, California courts have rejected the creation of community redevelopment agencies to use tax money to rejuvenate areas improperly designated as blighted. These decisions have correctly overturned projects that failed to meet any realistic definition of urban renewal. The rulings have also upheld long-needed reforms passed by the Legislature during the 1990s to end well-off communities’ abuse of the redevelopment law.

The most recent, and most outlandish, case involved the eastern Sierra town of Mammoth Lakes, which is attempting, in a deal with the Canadian firm Intrawest, to turn itself into a full-blown destination resort with new hotels and condos, a Vail-style village and golf courses. The plan includes direct air service from cities such as Dallas and Chicago.

The town drafted a redevelopment plan in 1997 that declared nearly all of its 1,000 acres, including the airport several miles away, as blighted. Under redevelopment law, the agency sells tax-free bonds to finance the projects. They are paid off with the increased property taxes that result from new development. All well and good, except that new taxes that would normally flow to the county, the state and other public institutions are diverted to repay the loans.

Mammoth proposed spending $136 million on projects that included airport improvements, a municipal pool, new police and fire headquarters and a gondola linking the new Intrawest village with the ski area. The projects in effect made the town a partner with Intrawest and Mammoth Mountain Ski Area. A group known as Friends of Mammoth sued, on grounds that the area really was not blighted and that the town had failed to conduct an adequate environmental impact study. The 3rd District Court of Appeal agreed, saying that Mammoth was indulging in a “municipal wish list,” not ridding itself of blight.

Town officials said they would appeal, but the Supreme Court already has refused to hear a similar case from Diamond Bar. The third case involved Murrieta, in Riverside County. Mammoth could certainly proceed with other forms of financing. Stretching the redevelopment law beyond reason is not the way.