Robin Hood and the Fullerton Redevelopment Agency's Wealth Redistribution Program

The Fullerton City Council is responsible for the redistribution of wealth within their City Hall. 

The Fullerton City Council will oversee about $300-million in expenditures for fiscal year 2010-2011.¹  One-third of the budget is allocated for Redevelopment Agency use, while the remaining 2/3, or $200-million, are for the general operation and maintenance of the City. Let’s look at that one-third or $100-million.

The City budget breaks down the source of the Redevelopment Agencies money into two areas.  First is the beginning balance rolled over from last year, which is $86.1-million.  The roll-over is from the previous year’s tax-increment (that portion of property tax revenue above what was typically collected before the establishment of the Agency’s zone), and bond revenue.  The second source of revenue is this year’s tax-increment, estimated at $16.6-million.

Those sources are very non-descript and deserve a little more attention.  Let’s look at who pays the tax-increment and why.



Fullerton Redevelopment
Project Area 3



John Smith purchased a home in 1995 and was paying the standard 1%+2% property taxes on the home until 2000, when the Fullerton Redevelopment Agency rezoned his property which was in an area designated as blighted.  At the moment the new zone was created, the property taxes on his property which were going to the local agencies were frozen.  Any INCREASE in his property taxes caused the additional revenue to be diverted from the local agency (City Hall) and into the hands of the Redevelopment Agency.  The diverted portion is the tax-increment.  This is detrimental to the overall well being of the City because it robs Peter (the police, fire, schools, and infrastructure) to pay Paul (the Redevelopment Agency). 

As if that wasn’t bad enough, it gets worse.  Let’s look at Fullerton Redevelopment Agency’s Project Area 3. This area is bounded on the North by Rolling Hills Drive, on the West by State College Blvd, on the South by Chapman Ave., and on the East by the 57 FWY and portions of Placentia Ave.  Most of the area is Cal State Fullerton property under the jurisdiction of the State, not the City of Fullerton.  That means there is no property tax collected on the State-owned portion.  There are a number of large homes which are considered blighted.  Or are they? 

I believe that nearly ALL of the homes in Project Area 3 are very nice and were only included in the zone so that the Redevelopment Agency would have a stable source of tax revenue.  Now that the project areas have been consolidated into one massive redevelopment project, it begs the question, what does the Redevelopment Agency need the money for?



Notice the homes in the north and westerly areas of this image. 

Most of these homes are in the $500,000-$1-million range and yet they

are all blighted. 



According to the Revised Adopted Budget for Fiscal Year 2010-11, the City Council acting as the Board of Directors of the Redevelopment Agency will spend $2.5-million on salaries and benefits for the Agency’s seven employees.  It will also spend $13.6-million on what the budget describes as “maintenance and support”.  I wonder if that includes conferences in Las Vegas…?  The Agency will also spend $10,000 on “Operating Capital Outlay”. So far, that brings the total to $16.1-million in expenditures.  The budget breaks down the remaining funds into two categories:  current capital projects ($13.9-million) and capital projects in progress ($24.3-million).  That leaves $49.5-million in the bank.  And yet the City Council felt the dire need to use the taxpayer's credit card to pass a $29-million bond in October!  The budget doesn’t go into sufficient detail on appropriations and allocations beyond that.  To find those details, one has to search the Redevelopment Agency’s records.  Save that for another post. 

The objective outlined for Project Area 3 is simple: Cooperate with Cal State Fullerton in efforts to enhance the Arboretum and in university district planning.  So, prior to consolidation, the tax-increment collected from all of those nice homes would go to supporting an arboretum and university district planning.  I had to write that a second time to get it to sink in.  All of those home owners paying property taxes to support those two endeavors.  Many of those homes were built after the Project Area was created, meaning that all or nearly all of the property taxes collected will go to the Redevelopment Agency and NOT to police, fire, education, and infrastructure.  Now that the project areas are merged into one mega project, the property taxes collected from those nice homes in the hills are going towards funding low- to moderate-income housing programs as well as small business loans. 

What makes things worse, yes worse, is that on one hand Redevelopment Agency staff is saying we have a shortage of low-income housing and on the other hand we are pushing low-income families out of the City. 

I have written and rewritten about the Orange County Register’s story on the Fullerton Redevelopment Agency blowing $22.7-million to redistribute Fullerton wealth many times.  You can read the original OC Register story here.

In essence, the Agency evicts families from very low-income and low-income apartments, bulldozes the apartments, and rebuilds nice condos for qualified moderate-income families.  It would be much like rounding up all of Fullerton’s homeless, giving them some money, and dropping them off in another city.  It’s unethical and doesn’t actually solve the problem. 

The Fullerton Redevelopment Agency is now a lumbering beast of debt and growing power that robs from the tax payers and gives to companies specializing in redevelopment projects.  The Agency is constantly growing its sphere of influence but for what purpose?  Officially the Agency exists to remove blighted conditions. Blight exists because the City of Fullerton has long ignored the graffiti, crime, and slum conditions.  The City of Fullerton should have been citing land lords at the first sign of a violation of the municipal code.  The City of Fullerton should have maintained the streets, sidewalks, and parkways.  The Police Department should have been more proactive in preventing crime. 

Of course it’s easy to sit back and Monday night quarter back the path our elected leaders have been taking us down for years.  Determining the best path out of this mess is a little more problematic.  It will first require that our City Council realize that it is time to pull the plug on the redevelopment machine.  It will require strong leadership from people who care about the long-term wellbeing of our city and are not afraid to walk alone. 

It will help to have the support of the public employee associations which should be easily garnered since they stand to directly benefit the most from the dismantling of the Redevelopment Agency.  The Agency has been bleeding the other departments for years.

Borrowing from Lincoln, City Hall should be a government of the people, by the people, for the people.