Plans to replace the junkyards and swap meets of western South El Monte with large business parks received a boost Tuesday when Los Angeles County dropped its opposition to the city's redevelopment proposal.
The Board of Supervisors agreed not to challenge the legality of South El Monte's first redevelopment zone in exchange for a guarantee that the county's usual 70% share of property tax will eventually be forwarded to it.
Under state law, taxes on the value of all new construction within a redevelopment zone go to the city redevelopment agency to pay for its activities.
But South El Monte officials said Tuesday that they agreed to pass along the county's usual tax share to avoid a costly and time-consuming legal battle.
"We felt it was more politically expedient to work out an agreement and not to drag this thing through the courts," Assistant City Manager Steve Henley said. "Our council gets along well with Supervisor (Pete) Schabarum and preferred to work things out."
In a concession by the county, the city can keep most of the county's tax share as a loan to help the agency get started. The money must be repaid, with 7% interest, when taxes to the redevelopment agency reach $2 million annually or after 16 years, whichever occurs first.
Prospects are that the $2-million level will be reached within a few years, because the city has agreed to a county request to double the size of the new Rosemead Business Improvement Project by August, 1990, Henley said.
The existing 96-acre redevelopment zone lies east of Rosemead Boulevard and south of Garvey Avenue. It will be expanded by adding more than 100 acres in the adjacent Garvey Acres area west of Rosemead.
Protect Its Share
Manuel A. Valenzuela, associate county counsel, said it has been county policy since 1984 to seek a full pass-through of tax revenue resulting from construction in a redevelopment zone. But the policy allows payment to be deferred so projects such as South El Monte's can be established.
The county, whose general fund and special districts receive about 70 cents of every $1 of general property taxes, said it stood to lose up to $108 million in taxes over the 40-year life of the new zone.
Since passage of tax-cutting Proposition 13 in 1978, cities and counties have shared the same limited tax base, and the county has tried to protect its share through legal challenges to new redevelopment zones.
"Most of our opposition has been withdrawn after we've reached some type of agreement (on tax revenue) with the cities," Valenzuela said.
In Los Angeles County, $261 million in property taxes, 10% of the total, was diverted to 60 redevelopment agencies in 1986-87, the county auditor reports.
With the county's challenge settled, South El Monte figures it will break ground on at least one new project in 12 to 18 months, Henley said.
Though the new zone was created by the City Council only seven weeks ago, six large development firms have approached the city with proposals for manufacturing projects, he said.
Developers have long been interested in South El Monte, a predominantly Latino city of 18,000 residents 12 miles east of downtown Los Angeles, Henley said. Attractions include cheap labor, vacant or underdeveloped land and a location near the Pomona, San Gabriel and San Bernardino freeways, he said.
Cash Benefits Available
But formation of the redevelopment zone--described as an improvement district because of historic opposition to redevelopment in the city--heightened that interest, he said.
The redevelopment agency has the right to acquire property for development, issue bonds for improvements and obtain property tax increments, which is the property tax revenue generated by growth.
Under redevelopment law, the city can also pay relocation benefits to encourage marginal businesses that occupy prime Rosemead Boulevard frontage to sell and relocate. Cash benefits are available to offset loss of business due to the move, Henley said.
Condemnation Ruled Out
Attempting to allay community fears that caused the city to disband its fledgling redevelopment agency in the 1970s, South El Monte officials have said they do not intend to acquire property through condemnation.
Instead, the city is "trying to get the owner and the developer to work together so we can get more major construction," Henley said.
Now, the 96-acre zone is "a hodgepodge of junkyards, swap meets, metal buildings (from) the 1940s and '50s and vacant or underdeveloped land," Henley said. One large shoe factory has only 15 or 20 employees, he said.
52% Have Deficiencies
The redevelopment zone includes two small trailer parks and a few houses, but most of the area is occupied by auto salvage or industrial storage yards. A city-sponsored survey found that two-thirds of the buildings were at least 30 years old and that 52% have serious structural deficiencies.
Much the same can be said for the Garvey Acres area west of Rosemead, although a number of new buildings have been constructed along that boulevard, Henley said. About 200 to 250 residents live in the area, most of them in old apartments on land zoned for industry.
Act as a Liaison
The city's improvement district also plans to act as a liaison for toxic cleanups, applying for state and federal funds and hiring an environmental officer, city officials said.
"If it's not manufactured in South El Monte, it's probably not made. We've got every chemical you can imagine," Henley said. So as land is cleared and soil tested during redevelopment, "I think it's almost guaranteed we're going to find hazardous materials contamination."