RDA 2.0 – A Really Bad Idea!

On Friday morning, August 2nd, the Development Committee met with only one real item on their agenda. “Enhanced Infrastructure Financing Districts (EFIDs) with presentation by Staff and Larry Kosmont, Kosmont Companies. The presentation from Kosmont, centered around “How do you capture vitality and quality of life in a digital economy?” However a good dose of “state mandates fear” formed the foundation upon which the presentation was built.

Let’s get to the heart of the matter.

There appears to be a growing interest in rejuvenating an old idea, redevelopment. This new… call it RDA 2.0… is a rebirth of tax increment financing for local/regional projects.

Managed by Brea’s Public Financing Authority, new redevelopment districts would be created, property taxes frozen and new “redevelopment” bonds issued to finance some sort of infrastructure projects.

No public vote is required to create these new “enhanced infrastructure financing” districts!

The mantra “no new taxes” is repeated over and over as if that will lull us into a false sense of trust and comfort.

Look, when the property values are reassessed and the taxes unfrozen, the properties will be paying at a much higher rate and the difference will be used to retire the bond debt.

What about this suggests no new taxes?

So, where are these new EIFDs?

The report listed: Central Park Village, Brea Place (Hines), Aera Energy Brea 265, 2830 East Orbiter (adjacent property owned by firm of Planning Commissioner James McGrade), Embassy Retail Court, Brea Mall, Brea Plaza, Former Improv, Gaslight Square, Regal Theatres, Mercury Lane Residential, Downtown hotel, Brea Community Center, Brea Library, and Suzuki Motor of America.

To me, 90% of these properties are either doing quite well as is or they’re in various stages of development… not even yet completed. And the United States Bankruptcy Court confirmed American Suzuki’s plan of liquidation (Chapter 11) on February 28, 2013.

The first city/county EIFD tax increment partnership is the Placentia Old Town district. Over 300 acres with taxes frozen at $365 million and anticipated to be unfrozen at $460 million. For what?

Kosmont lists the following: $22M net fiscal impact to City; $15M to County; 1,600+ housing units; 3,900+ construction jobs; $800M+ construction period economic output; 1,150+ permanent jobs; $164M+ in annual ongoing economic output.

Prove it.

Here is what Kosmont proposes to do in Brea: Kosmont to evaluate: Project and land use review; EIFD boundary alternatives; infrastructure improvements required; Tax increment funding capacity / complementary sources; Orange County cooperation; Implementation strategy and roadmap.

Kosmont proposed timing: Feasibility evaluation – 2 to 3 months; District formation activities – 6 to 12 months.

Stop the madness!

Not a whisper about seeking public review or approval.

In December 2011, the California Supreme Court upheld the complete elimination of redevelopment agencies and TIF along with it. The legal wrangling that followed is complicated and not worth going into detail here.

Suffice it to say Redevelopment was terminated for good reasons. Why, just 8 years later, has it suddenly become a good idea again?

Nothing in life is free.

They try and seduce us with parks and community projects. But where’s the money come from? From schools and our pockets!

From the mid-seventies through 2011 Brea built a boatload of RDA projects. Some were on private land and made reasonable use of the tax increment. Many, like the Civic Center, Community Center, Senior Center, Sports Park and Rails-to-Trails were on public land for which no tax increment existed!

District borders were repeatedly expanded, bonds were repeatedly refinanced and cash was created at every opportunity. Hell, they even tricked us into passing the Paramedic’s Tax, almost half of which never paid for a single thing related to emergency medical services.

No one in city hall can give you an accurate price for one single project. The web of financing hijinks was so complicated they’ve lost all comprehension of what they pulled off for over 40 years. Millions upon millions.

You know what really hurts? We still owe $193,871,104 million dollars which we’ll be paying off all the way through June 2036.

Revenue is down, expenses are ever on the increase, we’re hovering on the edge of unbalanced budgets for several years to come.

Now is not the time to start some fiscal boondoggle, proven to be a failure years ago. Especially if it does little more than provide job security to a handful of city planners having a tough time justifying their jobs anymore.

Tax increment financing (TIF) is no way to defray the cost of urban revitalization… assuming that’s what we want to do in the first place.

8 thoughts on “RDA 2.0 – A Really Bad Idea!

  1. Rick. Wow. You’ve done it again! It’s become a full time job to detect the self serving tentacles of that person trying to profit off of Brea.

    Make no mistake, making money from “risking” in Brea is a great thing. But making money by selling access and adding to the record debt we already have is an act of selfish greed. Let’s hope your fine detective work results in a fast flush of this bad for Brea ploy.

    Thank you

    • Dwight… The machinations that began with a sabotaging of my time on Planning by a seated member, ensuring I would’t be Chair when Hines came before the Commission, seems to have come full circle. I feel as though I have greater leeway to whistle blow from outside the wire than from within.

      Developers who take a calculated risk with their capital are to be admired. Those who employ every dirty trick to tip the table in their direction… not so much.

      RDA 2.0 sucks. People of Brea… rise up and crush this beast!

      • Rick. Why would a bond be issued on a project like the new 653 Hines / Avalon Bay project? It’s 100% funded and happening with private funds.

        Are you saying the city would somehow freeze the tax rolls on that site and “divert” all the new property tax revenue elsewhere? Don’t schools get over half of those newly created property taxes if left alone?

        Ironic that some robbers came to my coin shop twice in one week, and now someone or some people think Brea is ripe for the plucking a second time too!!

        No thanks!!

      • Dwight… it’s still pretty murky how this might work. Drawing lines around work-in-progress and completed developments to create an artificial property tax pool would seem to be less than legal.

        Property taxes from undesignated properties pay their fair share to support schools. Revenue from special taxes, where a portion of the funds are diverted to cover RDA obligations, must first also meet the entitled partied such as schools.

        Under the guidance of third parties like Kosmont, Koos and the like… cities seem easy prey. Especially when they’re supporting Planning and Development departments with a payroll burden approaching 3/4 of a million bucks or more… with little to do but process CUP applications for car washes.

  2. Rick,

    I enjoyed both your commentary and, then, the back and forth with Dwight Manley. Now, I am not claiming that I understand the machinations or shenanigans that you discover in dark Brea power corridors, here in the resurrection of redevelopment in covert proposal. Then, I did not even know that Suzuki filled for bankruptcy in 2013.

    I must keep my eye on the ‘swamp’ in Washington, trusting that you have our back in Brea.

    Thanks,

  3. This EIFD/TIF quasi public financing seems to me to be just Redevelopment in disguise, RDA 2.0, only without the eminent domain power.

    I’m not a big fan of esoteric tools for paying for things government ostensibly needs to do anyway. Always seems like a way to sneak up on taxpayers and voters without having to fully explain and justify how money, especially in the form of debt, is going to be raised and spent.

    Voters have an absolute right to know where their money is going and why.

    • Well put Mr/Mrs Wonk.

      I’m going to explain now why real transparency is so important AND how it’s almost impossible to figure out.

      The new parking structure had an approved budget and an approved “contingency” excess funding should unforeseen costs arise. This could be for engineering mistakes or delays or change orders. Due to minimal changes and good weather, there was six figures left over.

      Do you think this money went back to the dump fund where it came from or reduced the redevelopment bond balance?

      Nope. It was used to completely repave Orange Avenue. This freed up road maintenance funds that were then used who knows where. The closet thing I can analogize it to is a shell game.

  4. There have been repeated challenges by Mr. Koos and Mr Livingston regarding the “truth” of whether Monika is or was a senior consultant with Kosmont. I had provided a link to the company reporting the data, a commercial real estate firm database collecting & updating industry personal data, Crefirms.

    Update 1 – 08/13: The site confirming Monika’s relationship to Kosmont was shut down and I opted to remove it’s link today.

    Please feel free to come to your own conclusion why this has occurred and who might have been behind the eradication of evidence.

    The argument that “well maybe she did, maybe she didn’t” and blaming Kosmont for prematurely issuing a press release are silly. The first plays a child’s game of contradictory deflection. The second? I’ve never read a press release that said, “well… we almost hired her, but changed our mind.”

    Bottom line, there was a third party reference to Monika Koos as a Senior Consultant to Kosmont – I felt the connection was more than a little convenient given her husband John’s dogged attempts to promote and profit from development projects in Brea.

    Update 2 – 08/20: It’s interesting to watch on Nextdoor how the Koos surrogates and perpetual trolls have piled on to this thread. Not one of their allegations is supported in fact and the caustic jibes draw attention to their interest in character assassination over anything even remotely contributing to the discussion. They are, in a word, imbeciles.

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