California Redevelopment Goes to Wall Street: L.A. Mayor Begs Governor Brown for Mercy, County Supervisor Calls It 'Loan Sharking'
Pretty please, Governor?
Los Angeles Mayor Antonio Villaraigosa is intent on saving the L.A. Community Redevelopment Agency -- no matter what it takes.
The mayor's latest plea to Governor Jerry Brown (who plans to ax the state's redevelopment agencies unless he's presented with a satisfactory alternative) proves just how desperate L.A. City Hall is to keep the CRA around: Villaraigosa says he and other mayors would be willing to give up $200 million and 5 percent of their redevelopment revenues to the state each year.
Thanks, but no thanks, says California Treasurer Bill Lockyer. And it's easy to see why:
Under Brown's plan, the state would collect all existing revenue within the agencies, estimated at $3 billion, plus about $1.7 billion more in property taxes each year.
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So... we're not quite sure why Villaraigosa thought the governor would go for this, but...
When one's go-to piggy bank for big-developer handouts and million-dollar museums is at risk of being smashed to smithereens, we suppose anything is worth a try.
Los Angeles County Supervisor Michael D. Antonovich, whose interest in the CRA is the opposite (he'd obviously rather see its wealth redistributed by Brown into county schools and services), went so far as to call Villaraigosa a loan shark yesterday. From Antonovich's official statement:
"Charging taxpayers an interest rate of nearly 30% steals money from public safety and vital services," said Antonovich who noted that, in California, there are usury laws that protect consumers from exorbitant interest rates. "The Governor and legislature must get serious and address the state budget deficit through spending cuts and reforms -- not continued borrowing and tax increases which have led to a $26 billion dollar deficit."
Shucks. Our very own elected official? Loan sharking? It's a stretch, but the Wall Street connection is undeniable, and makes us all the more uneasy in this Great Recession we're living:
In short, Villaraigosa suggests California should sell $1.7 billion in invisible bonds, which the redevelopment agencies would then promise to pay back, little by little, over 25 years.
"It's not a solution," a spokesman for California Treasurer Lockyer told Bloomberg in a telephone interview yesterday. "It's another gimmick that doesn't fix the problem and just puts the state deeper into debt."
If they're cut, Brown has promised to put the agencies' money directly into essential services like public safety, libraries and schools. As it is, when property value inflates within "blighted" redevelopment zones, the agencies get to collect all extra taxes instead of giving a proportionately bigger chunk to surrounding schools and services.
For a rough roundup of ways the L.A. CRA has proved it needs to go, see "In Criminal Scheme to Skirt California Law, L.A. 'Community Redevelopment Agency' Only Reminds Us Why It Should Be Toppled." But you can bet Villaraigosa won't let this city cash cow out of his clutches without a fight for survival worthy of "JAWS IV."
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