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Claremont is one of the most affluent cities in Southern California. It is the home of the prestigious Claremont Colleges. Property values are rising rapidly. The heart and civic center of the city is the Claremont "Village," which includes City Hall, the county library, and numerous trendy shops and restaurants within approximately 14 blocks of tree-lined streets.
In 1973, the Village and the area to the west were declared a physical, social, and economic liability. Deemed "blighted," they became a redevelopment project. With the power of redevelopment, the City, its Redevelopment Agency, and two private developers redesigned and are redeveloping the area west of the Village at the cost of five existing businesses, a storage facility, and $2.25 million.
Redevelopment in California began in 1952 after the adoption of a new state constitutional amendment,Article XVI, Section 16, which permitted the creation of redevelopment agencies and their financing through tax increment. Tax increment provides a neverending source of revenue.
After a redevelopment project is adopted, taxes on real property in the project area are divided between the original taxing agencies and the redevelopment agency (typically the city council under a different legal label).The taxing agencies (for Claremont, 16 entities including the County, school, flood control, and water districts, fire department, etc.) and the redevelopment agency/city council receive the amounts they would have received before the adoption of the plan, plus additional, small, statutory amounts. The remainder of the tax increment-i.e., the additional property tax-is the revenue from the additional values assessed after the adoption of the redevelopment plan goes to the redevelopment agency/city council.
In addition to financing through tax increment, redevelopment agencies also have the power to take property by eminent domain and to issue bonds without the twothirds voter approval that is otherwise required in California. The agencies are responsible for new streets, sidewalks, curbs, gutters, landscaping signage, signals, public parking, trunk lines for sewers, storm drains, and communication and electricity. Redevelopment agencies are also responsible for demolition and grading.
Cities, through their redevelopment agencies, have these extraordinary powers for a reason, however questionable. Redevelopment was intended to revitalize blighted communities by reversing the decline of urban slum neighborhoods which have been rendered economically useless and a liability to the community. Also, there must be "true blight" as exemplified by the kind of inner-city slum conditions described in the Bunker Hill case. There, it was found that unacceptable living conditions were 82 percent, unacceptable building conditions were 76 percent, the crime rate was double the city's average, the arrest rate was 8 times the city's average, the fire rate was 9 times the city's average, and the cost of city services was more than 7 times the cost of tax revenues.
Unfortunately, rather than curing blight, redevelopment today is primarily used to recycle real property by using eminent domain to acquire parcels and sell them at a discount to a developer. Instead of private capital paying for the construction of streets, curbs, and sidewalks, redevelopment agencies often pay for them. The benefit to the city is increased sales tax and more upscale residences and commercial businesses.
To cure this misuse of redevelopment for private commercial benefit, the California Legislature enacted a statute that requires that 20 percent of the redevelopment tax increment be used for low- and moderate-income housing. As a general rule, however, this mandate is honored more in its breach.
The City of Claremont adopted a redevelopment plan which included the Village by passing City Ordinance 73-8. By doing so, the Claremont City Council declared that "blight" existed in the Village. Yet in its description of the Village's physical, social and economic conditions, the Claremont Redevelopment Agency described it as follows: The existing structures "were fairly well maintained"; residents were described as "predominantly white, of moderate income, and either elderly or young families with children"; economic conditions were "characterized [sic] by relatively static retail sales and a lack of dynamic growth in the commercial facilities."
In 2000 the Agency and City Council again reviewed the question of blight in the Village. The Claremont City Council found that the Village was indeed blighted. This "finding" was made despite the fact that the Village remains a vibrant, active area where rents are so high that several local businesses went out of business. According to the Redevelopment Agency's staff, "The Claremont Village is one of the most successful small downtown areas in Southern California. Parking spaces are nearly full most hours of the day, even into the evening, and there are virtually no commercial and retail vacancies in the Village."
Home prices around the Village are no longer affordable for most of the elderly or young families with children. Because the findings of blight were not challenged within 60 days after their adoption, they cannot be challenged.
The idea of expanding the Village across Indian Hill Boulevard, the main north-south street in Claremont, began in the early 1990s. The City decided to take what it termed a "proactive approach" to the expansion. Initially, the approach was directed to potential development, which evolved into the actual development of shops, a theater, a hotel, cafes, and offices. The development was initially called "Village West." But because this label struck fear into the hearts of the existing merchants, the Agency changed the name to "Village Expansion."
The City and the Redevelopment Agency wanted to ensure that the Village grew in an orderly, thoughtful manner that reflected the community's standards, "not just the whims of private developers" (Village Expansion section of Council Briefing Paper, 2002). But the Redevelopment Agency had already hired two consultants: One was a private residential developer; the other a private commercial developer.
The governmental "process" for developing the Village west of Indian Hill Boulevard began in 1998. That year, the Claremont Planning Commission began preparing a Specific Plan for redeveloping the area west of the Village into a mixed-use residential and commercial area. In January of 2001, the Village Expansion Specific Plan was adopted by the Claremont City Council. City officials laud the fact that during all the planning there were numerous public meetings: "The Village Expansion Specific Plan is based on a series of planning principles developed through an extensive public participation process. Each of the components of the Specific Plan was reviewed by City commissions at various meetings." Yet a majority of members of the public who attended these meetings has stated that the public's conclusions and recommendations fell on deaf ears and that city staff simply adopted the recommendations of the two consulting developers. The two developers that were originally hired as consultants to design the new Village were then hired by the Agency to build the new Village.
The Redevelopment Agency states that the success of the existing Village cannot be taken for granted and there are many examples of once-successful shopping districts that have deteriorated after being neglected by business owners and city officials. But these conclusions overlook the fact that the Village businesses do not, and because of high rents cannot, neglect their businesses, and that city officials in City Hall are in the Village.
The Agency claims that Claremont finds itself in an increasingly competitive marketplace. Will the market or the whims of two consulting developers provide the solution? The Agency argues that communities throughout Southern California are building new retail developments designed to attract consumers from outside city limits. The Village, however, is not a development. Claremont residents buy many of their goods outside of Claremont.They visit the Village for the ambiance, the good restaurants, and the specialty items available there.
The Agency seeks to create additional space for new businesses that want to open in the Village but does not answer the question of whether this includes large chain stores. The new Village would also provide larger retail spaces for businesses that want to expand. But if the demand is there, do the businesses need the Agency to grow? Thus, it is possible for the Agency to change radically the character of the Village, in defiance of public opinion.
The Agency also maintains that it is addressing the community's need for additional housing and taking advantage of the demand for homes near public transit rail stops, especially in pedestrian-oriented downtown areas. This goal was consistent with the purposes of redevelopment in that the City's Vision Statement of 1999 provided that 10 percent of the homes in the new Village development would be available to low- and moderate- income buyers.This was repeated in the Agency's draft five-year Implementation Plan for 2000--2004, where the Agency's staff proposed approximately 90 new housing units with 10 percent of them affordable to lowand moderate-income buyers.
The original "Vision" is no longer there. The residential developer is now developing what appears to be up to 256 units with no affordable units available for low- and moderate- income buyers.The units are being sold in phases. The first-phase units were made available first to the developer's employees and other "VIP buyers" (developer's language from their advertising).The units are now in phases two and three and are selling for between $377,990 and $435,990. The prices have increased with each new phase. In terms of low- and moderate-income residents, the Agency will only commit to striving to make some units affordable to moderate income households.
If the Village is the heart of Claremont, the backbone of the city is Indian Hill Boulevard that bisects the existing Village from the west. Starting from the south, the properties along Indian Hill were owned or occupied by a vacant area owned by the City and the Agency, a small City parking area, a successful veterinarian, an established real estate broker, a one-story house converted into an accountant's office, and a computer service store next to a two-story office building. On the street behind was located an ice house acquired for lease by the Agency and a television studio. There was also a public storage facility--unattractive, but not visible from the street.
To make way for the planned commercial development, all business properties on the west side of Indian Hill Boulevard for 2 blocks, from the veterinarian to the computer service store, along with the ice house, television studio and storage facility, were acquired by eminent domain or its threat. All of these structures, except the property occupied by the computer store, have been or will be demolished. The building that was a computer service store is now occupied by an upscale men's store leased from a new owner. (Two separate sources state that the new owner is the mother of the majority owner of the commercial developer/consultant). These previously viable businesses will be replaced by a six-screen movie theater concentrating on art films, a hotel and restaurant, a bookstore, and additional retail stores. All of these amenities, however, can already be found at nearby malls, within the Village itself, or on the campuses of the Claremont Colleges [Editor's note: The veterinarian held out the longest. The story of his struggle was published in the Winter 2002 issue of Local Liberty.]
The Agency's initial cost is approximately $2.25 million. Significant revenues are projected, and the Agency estimates recouping costs in approximately 4 years. This does not account for the fact that the land is being sold to the developers at "fair" value instead of "fair market" value, which means a significant Local Liberty discount to the developers and a corresponding loss of actual revenue to the Agency. Historically, redevelopment agencies generally project significant amounts of future revenue. In practice, little revenue is received; very often, none is.
Ultimately, at the cost of a number of viable businesses and a substantial out of pocket cost to the Agency, the Village expansion may work out well. But it may leave the existing Village a wasteland. Or it may fail and end as described by California Court of Appeal Justice Fleming when he wrote in Regus v. City of Baldwin Park: "But the landscape is littered with speculative real estate developments whose profits turned into pie in the sky . . . ." (italics by Justice Fleming).
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Mr. Ferguson is an attorney who practices in the field of land use and who lectures throughout California on redevelopment abuse.
Return to the Fall, 2004 edition of Local Liberty
