Redevelopment under fire in latest state report
SOUTH LAKE TAHOE, Calif. – A lack of accountability and transparency among some of California’s largest redevelopment agencies has created a breeding ground for waste and abuse, according to a report released by the state controller’s office this week.
The report arose from a five week, limited scope review of 18 redevelopment agencies ordered by Controller John Chiang. South Tahoe Redevelopment Agency, which administers two redevelopment project areas in South Lake Tahoe, was not included in the review.
Chiang found widespread accounting and reporting deficiencies, questionable payroll practices, substandard audits, faulty loans, inappropriate use of affordable housing funds and several missed payments to school districts among the agencies reviewed.
John Shirey, executive director of the California Redevelopment Association, defended redevelopment’s accomplishments and called the Chiang’s findings a “politically-motivated campaign piece” in a statement following the release of the report.
The controller ordered the review of the agencies after California Gov. Jerry Brown proposed eliminating redevelopment agencies to help close the state’s more the $25 billion budget deficit.
How redevelopment agencies track job creation is arbitrary, if tracked at all, according to Chiang’s report.
Existing legal standards also allow any area to be considered ‘blighted,’ Chiang said. An area needs to be deemed ‘blighted’ before it can be included in a redevelopment area.
Chiang found redevelopment funding is available for multi-million dollar beach front homes in Coronado, Calif. and was used to renovate greens and bunkers at a luxurious golf resort in Palm Desert, Calif.
“For a government activity which consumes more than $5.5 billion of public resources annually, we should be troubled that there are no objective performance measures demonstrating that taxpayers are receiving optimal return for each invested dollar,” Chiang said in a statement. “Locally-controlled economic development is vital to California’s long-term prosperity. However, the existing approach – born in the 1940’s – is not how anyone concerned with performance, efficiency, and accountability would draw it up today.”
Shirey defended redevelopment agencies in his criticism of the report, contending the agencies reviewed are not representative of redevelopment agencies as a whole. Redevelopment supports more than 300,000 jobs annually, Shirey said, echoing previous statements.
“The Controller has cherry-picked a few problems in reporting to draw broad conclusions about redevelopment that are not supported if one looks at the whole picture of redevelopment statewide,” Shirey said.
Eliminating redevelopment will have “permanent, devastating impacts” on the economy, Shirey said.
South Lake Tahoe City Manager Tony O’Rourke has also opposed Brown’s plan to dissolve redevelopment agencies.
California government took more than $2.4 million in South Tahoe Redevelopment Agency funding in the past two years and about $1.9 billion of the $5 billion in property tax used by redevelopment agencies statewide would instead benefit the state’s general fund under Brown’s budget proposal.
“The constitutionality of this action is questionable, and would probably result in significant and prolonged litigation,” O’Rourke said in a five year financial plan under consideration by the council. “Staff will continue to monitor this situation for impacts on the City budget.”
O’Rourke, as well as redevelopment and housing employees, have taken over operation the South Tahoe Redevelopment Agency following the dismissal of Redevelopment Agency Executive Director Eugene Palazzo late last month. Cutting Palazzo was part of a reorganization plan proposed by the city manager.
The City Council is expected to discuss additional job cuts, as well as the five year financial plan, during their regularly scheduled meeting at Lake Tahoe Airport Tuesday.
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