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State budget deal could help Industry stadium group

A provision that would extend the length of redevelopment status could provide key assistance to backers of an Industry stadium.

July 23, 2009|Jessica Garrison and Patrick McGreevy

LOS ANGELES AND SACRAMENTO — State leaders have said there are no winners in California's budget deal to erase a $26.3-billion deficit.

But at least one group might come out ahead: the City of Industry, billionaire real estate investor Ed Roski Jr. and backers of a proposed NFL stadium on 600 acres he controls east of downtown Los Angeles.

A provision of the budget agreement, which faces a vote in the Legislature as early as today, would extend the life of the state's redevelopment areas, a proposal that Industry officials have pushed for more than two years. Critics say the move would be a gift of public funds to benefit the proposed stadium and other private development at the expense of cities and counties that need the money for healthcare, welfare and police services.

A similar measure backed by Industry died in the Legislature last year after complaints from local government officials. But late in the budget negotiations, the city and its allies helped revive the proposal.

"They were able to find a mechanism to provide the infrastructure for an NFL stadium, but they aren't able to find the mechanism to fund nutrition for a hungry child," Los Angeles County Supervisor Zev Yaroslavsky said Wednesday. "It's galling. It's really galling."

Supporters of the proposal said they weren't pushing it to help underwrite a football stadium, but rather to generate badly needed revenue for the state.

"It prevents the cuts to local government from occurring," said Senate Republican leader Dennis Hollingsworth of Murrieta, who pushed the change. Without the plan, the state might have to take an additional $4.7 billion from local governments, he said.

Under state law, redevelopment agencies exist to upgrade blighted areas. A portion of property taxes flow through the public agencies to private interests to encourage development of housing and commercial projects.

As a result, the money is not available for other government programs. Well-known examples in Los Angeles County include Old Town Pasadena and the area around Staples Center.

Redevelopment areas exist only for limited periods of time. The current redevelopment area in Industry is set to expire in five years. The new law would allow those time limits to be extended for as much as 40 years without a finding of blight.

Many redevelopment agencies and the California Redevelopment Assn. oppose the measure, contending that it is unconstitutional and distorts the purpose of laws aimed at ending blight.

In return for the extensions, the state would get a quick infusion of cash. The law would allow the state to borrow at least $7.4 billion against future revenues. That would be made possible by a provision that would give the state 10% of the increase in property tax revenue in the redevelopment areas over those four decades.

It is unclear if the proposal is legal. To enact it, the state would need to obtain a favorable court ruling by Dec. 1.

If the proposal passes legal muster, however, it could be a substantial help for Roski, who holds 600 vacant acres in Industry near the 60 Freeway.

He has sought to build an NFL stadium there and has also talked about creating restaurants, retail centers and other attractions in the 2-mile-wide, 14-mile-long city that is home to industrial parks, scrap yards, strip clubs and fewer than 1,000 residents.

The stadium site is not in the redevelopment area, and Roski has said that the 75,000-seat facility would be built with private funds.

But adding decades to the life of the redevelopment area would allow Industry to use hundreds of millions of taxpayer dollars to build roads, sewers and other facilities to help accommodate the stadium and commercial projects, said Christine Minnehan, legislative director of the Western Center on Law and Poverty.

The ability to use redevelopment funds for 40 more years to spruce up the area also is "a selling point" for those trying to get approval for a stadium from the NFL, said Minnehan, who opposes the redevelopment law change.

Officials with Industry and Roski's Majestic Realty denied any connection between the law change and efforts to lure the NFL back to the Los Angeles market, which has been without a franchise since the Raiders and Rams left after the 1994 season.

The NFL has made no commitment to return to the Los Angeles area, and a host of obstacles stand in the way of a team playing in the area even if a stadium were to be built.

"Redevelopment enhances the city as a whole. The NFL is just happening to come in at the tail end," Industry Mayor David Perez said.

John Semcken, vice president of Roski's Majestic Realty, stressed there would be "no public money being used for our stadium."

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