A Legal Rip-Off at the Heart of Glendale

Those Enron tape recordings in which energy traders giggled about gouging California's electricity ratepayers were the height of audacity, but what's about to happen in Glendale, and has already happened in other cities throughout California, runs a close second. The Glendale City Council is betting that voters, in a special election in September, will swallow the Ponzi scheme known as redevelopment and approve a fleecing that parallels the energy rip-off.

Although redevelopment fiascoes exist throughout the state, Southern California has had more than its share. In the 1980s, Irwindale lost $10 million to the Raiders when the redevelopment deal to relocate the team there went sour. Orange County Supervisor Chris Norby recalled how auto dealers pitted Buena Park, Fullerton and La Mirada against one another in bids to locate in one of those cities, pocketing money from each.

At stake in Glendale is developer Rick Caruso's proposed shopping center, Americana at Brand. Touted as a man who knows his way around city halls, Caruso has been appointed to powerful commissions -- water and police -- by successive L.A. mayors. Now he is muscling in on Glendale, and the council is ready to give him what he wants.

What Caruso, who build the Grove in Los Angeles, wants is a massive subsidy -- primarily in land -- to build his project. Even his supporters concede that the city's gift would exceed $70 million. Redevelopment advocates claim the project would pay for itself through increased land value, resulting in more property taxes, and from sales taxes.

Not really. The 1993-94 Los Angeles County Grand Jury examined the abuse of redevelopment that was rampant even then and concluded that such benefits were a mirage. As in other cities, the increase in property tax revenue created by Americana at Brand would go, for decades to come, to pay off the bonds required to buy the land in the first place. Money that should go to schools, police and other city services would wind up in Caruso's company coffers instead.

As for sales taxes, redevelopment may help the local municipality, but it doesn't do anything for the revenues of Southern California. It merely moves the sales from one town to another, along with the taxes collected. The net result is a zero increase statewide in sales taxes from a redevelopment project.