What's up with redevelopment funds?

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What's up with redevelopment funds?
By Leon Worden
Friday, February 11, 2000

he city of Santa Clarita has invested a significant amount of money to revive Old Town Newhall, but the area has yet to generate an increase in tax revenue.”
    So it was reported in Wednesday’s Signal, and it’s accurate... insofar as it reflects the information presented at Tuesday night’s City Council meeting.
    Trouble is, the information presented Tuesday night was wrong.
    From 1993 to 1999, the Santa Clarita Redevelopment Agency spent approximately $2.4 million. With interest, it adds up to about $3 million.
    According to Tuesday night’s City Council agenda report, that money “(has) been used for the (downtown Newhall) facade improvement program, arts matching grant program for facilities, Newhall Street Faire and building fee assistance program.”
    It just plain isn’t true.
    You bet, if that much money had been spent on those things and there was nothing to show for it, we’d have a problem. But most of that money wasn’t spent on those things. In fact, according to city records that weren’t presented to the City Council on Tuesday, of the $3 million, only about $160,000 in redevelopment funds have been spent on actual Newhall redevelopment projects.
    Then where did the rest of the money go?
    A big part of it went to staff salaries and attorney fees related to the city’s failed attempt at a $1.1 billion redevelopment plan following the 1994 earthquake. Remember Donald Duckworth? The guy the city hired to flaunt the $1.1 billion redevelopment plan? His salary, among others’, came out of redevelopment.
    That’s right. Technically, the redevelopment agency borrowed money from the city to cover costs related to the $1.1 billion redevelopment plan that was killed in the courts because it violated state law. Now, the redevelopment agency must repay that money— and its only source of revenue today is property taxes in Newhall.
    I say “technically” because the redevelopment agency board and the City Council are the same five people. So in other words, the city borrowed from itself to pay for the now-defunct redevelopment plan. Stated differently, property taxes from Newhall will end up paying the city’s debt for the old, non-Newhall redevelopment plan.
    I’m not saying the redevelopment agency doesn’t have an obligation to pay its debts, however inappropriately the city may have incurred them. I’m simply saying, let’s not try to shove the facts under the rug.
    Here’s an itemization.
    In the first years after the earthquake, the city spent approximately $1.5 million in redevelopment funds. A lot went to staff and attorney costs associated with the $1.1 billion redevelopment plan. A small portion was spent on preliminary plans for downtown Newhall redevelopment.
    In December 1996, the city formed an all-volunteer committee to promote downtown Newhall redevelopment. In that first year (fiscal year 1996-97), following the demise of the $1.1 billion plan, $329,375 in redevelopment funds were spent. The bulk of that money was legitimately spent on consultants who helped the volunteer committee devise a formal redevelopment plan for Newhall.
    In fiscal year 1997-98, $213,722 in redevelopment funds were spent, largely on costs connected to adopting the Newhall redevelopment plan.
    In fiscal year 1998-99, a total of $322,231 in redevelopment funds were spent. About half went to administrative costs, while the other half went directly to Newhall redevelopment projects.
    Of that half, $63,851 went to property owners as an incentive to improve the front of their buildings, $64,995 went to the Santa Clarita Repertory Theatre, $24,502 was used to put on the Newhall Street Faire and $6,129 was spent on Christmas decorations for the downtown light poles.
    When it comes to the relatively small amount of “real” redevelopment money that has been spent on “real” redevelopment projects in downtown Newhall, Newhall has quite a bit to show for it. Several storefronts were completely renovated with the facade improvement money, and the Santa Clarita Repertory Theatre is staging performances its new theater space on San Fernando Road.
    Much more has been going on in downtown Newhall, such as the construction of a new Metrolink station, the opening of Railroad Avenue, and the installation of curbs, gutters and sidewalks. Those improvements were funded with other pots of money, however, not redevelopment funds.
    Successful redevelopment requires a rather large expenditure on the front end— a bigger expenditure than has been made to date in downtown Newhall. Redevelopment pays off handsomely in later years, once the improvements are put into place and shoppers start spending money there.
    Bottom line? Yes, the redevelopment agency incurred about $3 million in debt from 1993 to 1999. But no, very little— only about $160,000— has gone into actual redevelopment projects in Newhall.
    This exercise begs the question: Why would staff present false or, at best, incomplete and misleading information to the City Council? Is it because someone at City Hall wants the council to think redevelopment isn’t working, so the redevelopment zone should be expanded?

Leon Worden is The Signal's business editor.