SOURCE: State Controller's Office. Figures rounded off to the nearest $100 million. ~ No New Taxes & The Tooth Fairy Myth ~  Los Angeles' Redevelopment Agency will rob nearly $400 million dollars from local government services, with 40% to 60% of this money going towards their wasted overhead which is supporting an entirely unnecessary and highly inefficient layer of government. These 40 year projects (31 of them in L.A.) also mortgage our future since they are financed with bonds, which we all know requires substantial interest payments! As the State Contoller's projections show (Table I, above), the CRA will need an ever increasing share of the tax pie just to remain solvent and pay off their bond debts. In just a few short years the CRA will need over 50% of all of Californias' tax revenues - would that even be possible? Hardly! Surely, the system will crash under its own weight long before that happens! The question is - when? ~ Tax Increment Financing ~ CRAs finance their activities by selling bonds using future "TAX INCREMENT" revenues as their collateral. The "tax increment" is the difference between the property taxes assessed at the time the redevelopment project is formed and higher property taxes later due through normal inflationary adjustments. Normally, these increased tax revenues would go to local governments and school districts. CRAs want us think that this is "magic" money appearing from out of a hat with no new taxes; however, since the CRA's diverted "tax increment" monies would have normally been distributed to all government agencies (e.g., county, city, fire dist., library, schools, universities, flood control, sewers, etc.) this lost revenue has to come from other sources - sometimes from the state, which ends up costing all Californians money. Is this ever increasing "tax diversion" worth building low cost housing units that end up costing that agency almost twice their worth to build? There are 3 types of lies: (1) Regular lies; (2) Damn lies; and, (3) CRA's statistics: There are also other significant hidden costs which the CRA would prefer to ignore: 1. NO taxes are paid on property while it is owned by CRA; 2. Newly redeveloped properties require more services than less developed properties, but any higher property taxes in redevelopment projects don't go to city or county government for those services (they go to the CRA); 3. Fewer than 3% of all CRAs have repaid their debts and returned tax increment income to local taxing agencies, including cities, counties and school districts; 4. Legal costs! - Some school districts have been forced to sue CRAs in an attempt to reclaim these "diverted" funds just to maintain their basic services; 5. Often, tax increment money is used for infrastructure upgrades that clearly should be paid for by the developers. Taxpayer subsidies to developers, which are intended to encourage big-box retail sales tax generators into their project areas, is a major part of the CRA agenda. The problem is, often CRA just lures these large retailers from one part of the city to another, which actually results in even lower tax revenues for L.A. City. EMINENT DOMAIN The right of all Americans to own property is the basis of our democracy. The founders of this nation did allow for the government to take property with just compensation for public works. Eminent Domain was never intended to subsidize commercial development. Aside from the fact that it is morally wrong to take a person's property to build a shopping center or office building, there are other considerations. For example, if a property owner is not satisfied with the property valuation made by the CRA, he or she may end up fighting in court to recover the property's full value. CRA lawyers are provided at public expense, the property owner's are not. Cases have been known to drag on for years. Few people or businesses can stand that kind of strain. CRAs may offer relocation assistance to "qualified" people. However, often it is difficult to qualify and assistance is promised to be reimbursed (not paid up front) so there are no guaranties. Dislocated property owners lose all Prop 13 protections because they "sell" their property to the CRAs who have, in reality, taken it; thus, these evicted property owners' replacement property has a new higher assessed value. TAXPAYER BACKED BONDS CRAs have the power to float bonds, without voter approval, for project area development. These bonds are supposed to be paid back from tax increment revenue. If for any reason there is not enough tax increment revenue, cities or counties repay these bonds from general funds. Some communities, like Lake Elsinore, are saddled with tens of thousands of dollars in per capita debt because of a CRA run amok. Everyone knows that in science, air tries to rush in to fill a vacuum. Likewise, something has to rush in and fill the missing $300 million gap in our tax base that these 31 L.A. City projects cause, and that "something" is higher taxes, and less services, for us all!  [1993-94 Grand Jury Report] [Return to Main Page]