VScope
editorial screed
03/26/06

.... And now, from those wonderful folks who brought you Overdevelopment:

R e d e v e l o p m e n t

Redevelopment? People often confuse redevelopment with federal "urban renewal" projects typical of large eastern cities of the 1940s-'60s. Sadly, the methods and results are often similar. Has this dubious planning philosophy, originally touted as a remedy for decaying urban slums and industrial "brownfield" conditions, become the latest pretext for the relentless construction mania and plunder known as suburban Sprawl?
Yes.
It's easy, when you don't have to ask the voters.

Suburban development plans were impeded by "obstructive" laws in the public interest, meant to protect the water supply and other natural infrastructure, but NJ developers now see how they can grab what's left of the "unimproved" countryside by entering through that huge bond-o-rama loophole called Redevelopment.

Pick up any newspaper and chances are that you'll be reading enthusiastic pie-in-the-sky press releases (and artists' renderings of future "new communities") provided by pro-redevelopment interests.
In the same newspapers you might read about "old community" folks who have been dispossesed and driven out by redevelopment.
Precious few newspapers trouble to connect the dots.

Unbelievable.

But you can believe that the beneficiaries of redevelopment are not local communities.
They are not individual citizens, who will see their property rights eroded as public debts mount.

You can believe that the real beneficiaries will be the consultants, lawyers, bankers, bond brokers and developers who create, finance, advise, build and otherwise make vast sums from redevelopment projects. Together, they form redevelopment's core constituency and its only profit center.
Redevelopment thrives on contributions from its real beneficiaries - and on the general public's lack of awareness.

Redevelopment is truly a "special interest." It would be hard to find a more costly distortion of the free enterprise system.
Consider: if new developments are justified by market demand, they will be built anyway. If not, they will fail regardless of any tax incentives and subsidies.

Redevelopment has become a massive wealth-transfer machine. Cash and land go to favored developers and corporate interests while small business owners and taxpayers must pay the bill.

With redevelopment, towns have the power to directly subsidize commercial development through cash grants, tax rebates, or free land. A developer receives lucrative public funding for projects the town council/redevelopment agency favors.

Some receive cash up front from the sale of bonds they will never have to repay. Others receive raw acreage, or land already cleared of inconvenient structures.
They purchase the land at substantial discount from the redevelopment agency. Sometimes it is free.

Redevelopment has resulted, historically, in a vast over-building of vacant commercial space stimulated more by tax subsidies that by actual consumer demand.
As towns become more predatory, financial "incentives" are needed not just to attract new commercial ratables, but to keep existing commercial ratables from moving away.

Meanwhile, there are two reasons redevelopment debt is so attractive to its core constituency:
First, redevelopment agencies (appointed by town councils) may sell bonded debt without voter approval. Unlike the state, counties and school districts, the debts need not be justified to, or approved by, the taxpayers. A quick majority vote by the agency (appointed by the town council) is all that is needed.
Second, bond brokers love to sell redevelopment debt. The commissions are high and the buyers plentiful. Since the debt is secured against future property tax revenue, they are seen as secure and lucrative. If an agency over-extends, then the town's general fund will cover the debts - which, by law, must surely be paid.
Before long, redevelopment agencies divert property taxes from real public needs.

By law, for a redevelopment agency to begin receiving property taxes, it must first incur debt. In fact, property tax revenues may only be used to pay off outstanding debt. Pay-as-you-go is not part of redevelopment law or philosophy.

Debt is not just a temptation. It is a requirement. That is why redevelopment hearings inevitably feature three groups of outside "experts": the blight consultants, the lawyers, and the bond brokers who help the agency incur debt so it can start receiving the tax increment.

Elected local officials often claim to be intimidated by the complexity of redevelopment law, its specialized jargon and mind-numbing financial figures. No matter, so long as they uphold the ambitious politician's Prime Directive, which is (1) stuff the pockets of your rich friends/campaign contributors with dollars, and (2) convince the public that the taxpayers will be getting the kind of town they always wanted - because of the town administration's moral superiority, political experience, financial vigilance, concern and vision.
That vision was not imparted to them by The Public, but by a hidden core constituency of greedheads.
It is a vision of private fortunes built with public money.

Everything follows from that.

Under redevelopment, "public use" now includes privately owned shopping centers, hotels, luxury housing/condo projects, auto malls, sports training centers, movie theaters, and various "large/lucrative commercial ratables."

So "public use" is now anything a favored developer wants to do with any land in the redevelopment zone - including another individual's land.

And eminent domain is used to effect what once were purely private property transactions. Its use nearly always favors large developers at the expense of small property owners. In a typical redevelopment project, a developer is given an "exclusive negotiating agreement," or the sole right to develop property still owned by others.

Once the agreement is made, small property owners are pressured to sell to the redevelopment agency, which acquires the land on behalf of the developer. If refused, the agency holds a public hearing to determine "public need and necessity" to impose eminent domain. By law, this must be an impartial hearing.

In reality, the redevelopment agency has already committed itself to acquiring the property for the developer, so there is little doubt of the outcome. (Remember the three groups of outside "experts": the blight consultants, the lawyers, and the bond brokers who help the agency incur debt so it can start receiving the tax increment.)

Whole areas of towns can be acquired, demolished and handed over to land-grabbing developers to recreate in their own image.

Historic buildings, local businesses and unique neighborhoods can be replaced by generic developments devoid of the character that once gave communities their identity.

Small property owners have little chance to participate in redevelopment projects. Consultants and redevelopment planners prefer to work with one huge parcel under a single ownership.

Taxpayers and homeowners just get in the way.

All a town need do to justify creation or expansion of a redevelopment area (or "redevelopment zone") is to declare it "blighted".

To make a finding of blight, a consultant is hired to conduct a study. New redevelopment areas are largely driven by town staff, who choose the consultant with the approval of the visionary town council. Consultants know their job is not to determine if there is blight, but to declare blighted whatever community conditions may be.

Indeed, one of the definitions of blight is that of "irregularly shaped lots with multiple ownerships," to be solved by "consolidating parcels" for a favored developer to control. The variety of land owners and uses that give towns their individuality becomes an excuse for expropriation.

Eminent domain is defended as a tool of "last resort."

But eminent domain lies at the heart of the coercion that makes redevelopment possible - and destructive.
Besides, if their plans are thwarted and their pockets are not sufficiently stuffed, dangerously greed-crazed real estate developers will sue The Town and even The State so as to make up for the "losses" by requiring taxpayer dollars as reparations.
This seems to be part of a familiar political contract: the taxpayers' great purpose of life is to boost the fortunes of consultants, lawyers, bankers, bond brokers, endlessly grasping real estate developers or wannabe real estate developers, and the politicians whose election campaigns they finance.

Redevelopment? Here's how it goes.
The consultant has found the blight.
The lawyers have drawn up the papers and defended the agency from lawsuits.
The bond brokers have created the debt, to be paid by the tax increment that will surely follow.

In reality, very little is ever heard again about blight. Redevelopment agencies (council members usually double as agency directors) are driven primarily by creating new revenue. Since most towns with redevelopment have little or no real blight anyway, creating new government revenues becomes their prime goal. They do so in two ways:
Debt: As we have seen, an agency incurs debt to be paid by future property tax diversions. In this way, it can perpetuate its own activities indefinitely by continuing to borrow.
Tax Flummery: By promoting "economic development", a redevelopment agency can claim to be stimulating new commercial ratables that benefit the town's general fund. In this way, it tries to justify itself to the tax-stressed citizenry. It matters not that existing tax excesses are the result of earlier crusades to sanctify upscale commercial development - and the accompanying large-scale "luxury" residential development.


Wherever you live, support officeholders and candidates who understand redevelopment and can make their own judgements independent of those who profit by it.
Make redevelopment debt subject to voter approval. This would limit debt issuance and make agencies more publicly accountable.
Monitor agency agendas, challenge new debt issuances and expansion of project areas.
Controls must be placed on the use of eminent domain. Support property owners threatened with eminent domain and local small businesses facing large tax-subsidized competitors.

Redevelopment is a layer of government created by the state, and has no powers other than those granted by the state. Unfortunately, many legislators and their staffs still do not fully understand redevelopment and see little political gain in challenging it. Its opponents are many, but still scattered and unorganized, while its beneficiaries are vocal and well-funded.

Opposition to redevelopment is growing.
It includes those who are pro-property rights and those who are anti-corporate-welfare. It includes taxpayers who oppose increasing public debt, and who question the destruction of neighborhoods. It includes environmentalists concerned about suburban sprawl, and preservationists lamenting the demolition of historic buildings.
It includes those who are opposed to perpetuating the real blight : taxpayer-subsidized, water-sucking, clear-cutting overdevelopment by whatever euphemistic Rename those wonderful folks might bring us.



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