‘Blighted’ Retail Area Is a Hard Sell

Fronting Ventura County’s busiest freeway, in a bustling shopping center, a big-box store sits vacant.

To the city of Oxnard, the shuttered Home Base store, and a closed Home Depot nearby, are not only victims of keen competition in the home improvement business, they’re also examples of urban blight.

The two hulking buildings, as well as three aging shopping centers, were included this spring in an Oxnard redevelopment zone after the City Council declared them an economic burden on the community -- a move that funnels new property taxes in those areas to the city to underwrite their revival.

Critics maintain, however, that the new redevelopment projects represent a tax grab that will siphon $50 million over 45 years from local schools, community colleges, special districts and the county.

“Their only redevelopment plan for these areas is to collect money,” said Assistant Ventura County Counsel Daniel Murphy, who recently sued the city to block the plan.

“It’s a tax reallocation program, not a redevelopment program. And it’s illegal.”

Oxnard’s attorney, Murray Kane, counsel to many city redevelopment agencies including that of Los Angeles, said Oxnard followed state law when adding the five shopping areas to a redevelopment zone. “We think we documented blight conditions very well,” Kane said. “In each center you have a building that’s been abandoned by a major retail user. You’ve got old, obsolete, dysfunctional buildings which private enterprise can’t use for modern retail activity.”

Some urban planning experts say the Oxnard case raises questions about whether state redevelopment law -- plagued by controversy for decades -- is being used to revitalize depressed neighborhoods, as intended, or as a way for cities to divert tax money from other public agencies.

“This is not about making people’s lives better because they’re living in decrepit conditions: It’s all about money,” said George Lefcoe, professor of real estate law at USC Law School. “That’s what redevelopment has become, but that’s not what it was designed to be.”

The Legislature passed the California Redevelopment Law half a century ago to help cities rebuild economically depressed, or blighted, neighborhoods. Cities and counties flocked to the program after passage of tax-limiting Proposition 13 in 1978, prompting complaints of abuse against rich cities that claimed blight and against rapidly growing cities that included tracts of vacant land in redevelopment zones.

Legislative reforms in 1984 and 1993 closed the loophole on vacant land and provided a more precise definition of urban blight. Today, a blighted area has to have problems “so prevalent and so substantial” that they constitute “a serious physical and economic burden on the community which cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment.”

In general, that means state law requires redevelopment to be “the economic development tool of last resort,” said Peter Detwiler, consultant for the Local Government Committee in the state Senate.

“The Legislature may need to reexamine the use of that ‘prevalent and substantial’ standard,” he said. “The Oxnard situation certainly encourages another look.”

The Oxnard case stands out, experts said, partly because the city added five potentially tax-rich commercial areas from around the city to a redevelopment zone -- without including the neighborhoods around them.

It also stands out because the former Home Base store and its parking lot are the only elements of one revitalization project. Both Lefcoe and William Fulton, a senior scholar at the School of Planning, Policy & Development at USC, said they think that is unique in California.

“I’ve never heard of a city declaring one store in a shopping center blighted,” said Fulton, who is also an elected councilman in Ventura. “So Oxnard is clearly pushing the edge of the envelope.

“But this is the constant question with redevelopment: Is it supposed to achieve a narrow goal of the legislation, or is it supposed to be a broad and flexible tool for the cities to use?”

In the case of the closed Home Depot store, the business moved into a bigger building in a new shopping center nearby that was also in a redevelopment zone and partly underwritten by the city’s redevelopment agency.

“It’s a statewide scam, and it’s gotten so bad these cities are even pirating from themselves,” said Orange County Supervisor Chris Norby, founder of Municipal Officials for Redevelopment Reform.

“In Brea, they had two redevelopment-subsidized movie theater complexes shut down when they opened a third redevelopment-subsidized theater downtown,” Norby said. “It’s a senseless Ponzi scheme, and taxpayers are footing the bill. We need classrooms, not Costcos.”

John Shirey, executive director of the California Development Assn., said the state’s 386 city and county redevelopment agencies have been widely successful in reviving sagging communities, producing thousands of jobs and desperately needed affordable housing. And Oxnard, he said, is acting aggressively to keep the community from declining to the detriment of all.

“It’s not funneling money away from other taxing entities,” Shirey said. “It’s keeping properties from being further devalued.”

And although it may be novel in California for a single store to be a redevelopment project, it’s common in some other states, Shirey said. He said the Home Base project sounds reasonable.

“Their thinking is that there’s a growing cancer there,” he said. “And if they don’t nip it in the bud, it will spread to the entire center, and then they’ve got a huge problem on their hands.”

But county lawyer Murphy said Oxnard’s position doesn’t make legal, or common, sense.

Oxnard is in the midst of its biggest building boom since the 1980s. And owners of four of the five affected shopping centers planned to rehabilitate or replace them even without the help of the city redevelopment agency, he said. Three of the properties have been sold to investors in the last two years, records show.

The fifth property, the 1987 Home Base store, does not qualify for redevelopment assistance simply on account of being vacant, Murphy said. It is in a shopping center that does solid business at its other stores, including Sport Chalet, Marshalls and Office Depot, city officials acknowledge.

But Curtis Cannon, community development director for Oxnard, said the city acted out of necessity when qualifying the five centers for redevelopment assistance.

At the Home Base center, every other major tenant had threatened to leave when their leases expired if a replacement were not found.

One potential replacement, Fry’s Electronics, required modifications the owners said they could not afford, Cannon said. But now, with a promised redevelopment tax subsidy, he said it appeared that a deal would be reached with Fry’s.

As for improvements at the other sites, Cannon said the city was not certain they would occur without redevelopment assistance.

The owners of half-empty 1950s-era Carriage Square, in fact, said they needed city help to rebuild the center, Cannon said. The square -- at one of Oxnard’s busiest intersections -- was one of 15 properties purchased last year for $57 million by Newport Beach-based CT Realty Corp. and Messenger/Sandpiper Cos. .

Cannon acknowledged that owners of the small, aging Channel Islands and College Park centers said they didn’t want to be involved with redevelopment, fearing that the city might then use its eminent domain powers to seize their properties.