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.

Silence Isn’t Golden.

matter

(Thanks to Hugh MacLeod for his insightful doodle and thought for today.)

Assuming that Council does the right thing about Koreagate, that those who screwed up are held accountable and that the door is permanently closed to that sort of shenanigans, we have plenty on our plate that deserves close attention and it’s time for the folks that call Brea home to speak up.

The 560 Fund.

bigdump_aThe 560 Fund is Brea’s payback from Orange County for keeping the Olinda Alpha landfill open through December of 2021 and these monies were to mitigate the traffic, noise, road damage and provide other “community benefits.”

This purposefully nebulous phrase was slipped into the contract language to ensure there was virtually no limit on the number or type of boondoggles that could be foisted on an unsuspecting public.

DumptruckTotal income is expected to exceed $30 million dollars, and to date we’ve received $10.5 million and have less than $3 million left.  The 560 Fund has evolved into an obvious slush fund to avoid having to use the General Fund money to pay for the project du jour.

Again, the 560 Fund was never meant to be a slush fund but that is precisely what it’s becoming.  So… let’s play follow the money.

No return on our energy investment.

solarStaff tricked Council into making the first bond payments for the Solar Energy project, totaling over $1.7 million dollars, using the 560 Fund.  In case you forgot, that’s the green project staff sole sourced from Chevron Energy Solutions by duping Council into believing the project would pay for itself.

Though I don’t believe it’s been conducted yet, Chevron get’s to audit themselves, which our Finance Director characterizes as a cost saving effort.  Really?  Do you think for a minute they’ll admit to cutting down the cherry tree?

Judging a book by it’s cover.

libraryThere are those that would like to tap the 560 Fund to give a gift to the County of Orange by buying and remodeling the old Tower Records building, turning it into a new library.  Without question, this library idea is a project easily in the umpteen million dollar range.

The RDA already blew the chance to build a multilevel parking structure on Super Block 1.  Does anyone really think the city would take a property the scale of the Tower Records building off of the tax roles and then give it away?

Where do you plan to be in 2030?

engagementStaff wants to dig into the 560 Fund to pay nearly $300,000 dollars to some outside consultants to create public engagement opportunities under the guise of “Envision Brea 2030.”  The ruse is to get input from Breans, across all demographics, to help guide Council and staff as they plan their Brea of tomorrow.

Were you at the Community Center for the budget workshop to help set priorities for the Budget Strategic Planning (BSP) group?  Did you attend the public meeting to give input on reorganizing Brea’s Fire Department?  Did you participate in the group asked to suggest how to develop Rails to Trails and the community building on the Birch Street Golf Course? Were you able to let the city know what we might need for affordable and senior housing in the future?  Probably not, most people weren’t

Staff has made it quite clear that, unless you’re lucky enough to be one of Good Ol’ Brea’s pet special interest groups, you can keep your thoughts and ideas to yourself.

How about starting a savings account?

Wouldn’t it make more sense to set whatever is left of this 560 Fund aside, invest it, let it grow and have it available if and when we should get blindsided with some crisis?

We need to put a stop to their, “If we’ve got it, we’ve gotta spend it.” mentality.  What’s wrong with demanding that staff live within their means?  It’s what you teach your kids!

But wait… there’s more!

Under the single label of fiscal responsibility, we have an almost unending list of serious issues to keep an eye on.  In addition to Brea’s growing unfunded pension liability, now there’s rumored to be an OPEB (Other Postemployment Benefits – medical retirement) shortfall currently $17.3 million dollars and growing at nearly 30% each year. To make matters worse, Brea is totally unfunded for this liability.

We’re still trying to maintain a high functioning Fire Department with oversight by Fullerton and rebuild a Brea Only Police Department after getting dumped by Yorba Linda – neither situation having been properly reviewed by Council or a status report to the community provided.  What’s really working, and what isn’t?

You can also put CFD’s (Community Facilities Districts) on the watch list too.  Hamstrung by Prop 13’s capping property tax increases to no more than a limited inflation factor, CFD’s are a way to dodge Prop 13 and generate uncapped revenue.

When is a CFD not like Mello-Roos?

housingWhen it double taxes citizens, making them pay twice for the same infrastructure (police, fire, paramedics, etc.), all without a sunset clause when the costs have been recouped.

Even though they publicly admitted having reservations about double taxation and equity issues, Council members Moore and Marick joined with Garcia and Murdock last night (05/21) to approve CFD’s for Central Park Brea and Taylor Morrison developments – without having the broad discussion promised by staff, as Council member Simonoff reminded everyone, or conducting the public hearing (slated for 06/04).

At the public hearing, only the developers, as “property owners” will add their vote of approval, largely because they’ve had their feet held to the fire and just want to get on with things.  Who speaks for the almost 600 ultimate property owners that, through their CFD fees, will be stuck paying the bill… not until everything is paid off, but forever?  Where is their vote in this matter?

Isn’t it generally understood that the creation of new taxes requires a vote of the people?Don’t use the excuse that this is a fee when it’s obviously a tax.

How much longer can we afford a silent majority?

citizenTime’s up I’m afraid.  If you think you can continue to sit idly by, keeping your opinions to yourself, and everything will work out fine in the end… you’re wrong.  We can’t avoid confrontation any longer.  It’s never been more important than right now for everyone to step up and be heard.

Remember, if you’re not part of the solution…