When State Controller John Chiang sends his auditors into the unfathomable recesses of the Los Angeles Community Redevelopment Agency, he hopes the city officials will not engage in their usual practice of hiding bad news.
As he told one city manager in a previous fiscal examination, “you let me see everything.”
Chiang, the state’s fiscal watchdog, spoke Sunday to the Pacific Palisades Democratic Club. Like Gov. Jerry Brown, he was unrelenting in promising cuts in state services.
One of the Brown cuts would wipe out the state’s more than 350 redevelopment agencies. The agencies have the power to declare land blighted, buying it at a low price and selling it to developers, Billions of dollars are involved in these incredibly complicated transactions. Basically, the agencies borrow money to buy the land and also for the infrastructure needed for the developments. Property taxes may rise but the money is diverted to pay off the debt, depriving schools and other services of revenue. Some of proceeds from the deals are now shared with schools. But not much. Brown correctly wants much more for schools, law enforcement and other worthwhile causes.
Chiang said his auditors will try to find out how much money is actually diverted by the redevelopment agencies to schools and other uses. He said his auditors will also look at “the compensation packages of top officials.” And he wants to know how the redevelopment agencies define “blight.” The agencies notoriously engage in the practice of declaring empty land or other useful property blighted and then turning them over to developers.
I wish the controller’s auditors a lot of luck when they demand that the redevelopment agencies open their books. There are only 300 auditors, Chiang said. That means there are 50 more agencies than auditors. And some of them, like the Los Angeles CRA, are huge. The Los Angeles agency is a labyrinth of complicated deals. The bureaucrats, having seen state and city auditors come and go, will be well prepared for Chiang’s people.
I’m not even counting the political pressure. City government is a powerful lobby in Sacramento. The redevelopment agencies’ lobbying organization, the California Redevelopment Association, has banks and other financial concerns, real estate developers and lawyers as members. All have a huge financial stake in saving the redevelopment agencies. All have powerful lobbying clout. Assembly Speaker John Perez is a former member of the Los Angeles Community Redevelopment Agency board. Expect these powers to put roadblocks in the way of Chiang’s audit.
So when Chiang demands that the redevelopment agencies “show me the money,” and city officials reply “what money?” he had better have a Plan B