Idiocy in Lodi

What’s wrong with these two stories?

Redevelopment to top Lodi agenda in June

Lodi moves to cap lunch wagons

It seems to me that on the one hand, they are saying the city is poor and blighted and they need to borrow tons of money to “re-develop” the city.  And in the 2nd story, they are “cracking down” on hard working people who are making jobs for themselves, providing a service, feeding their families with their own initiative, etc.

Do you need any better illustration of what’s wrong with the central valley and the People’s Republic of California?

MORR Conference on Redevelopment Abuse November 7

If you're interested in what the "Redevelopment Agency" (RDA) is and what it does, MORR (Municipal Officials for Redevelopment Reform) is holding their 15th Annual Northern California Conference on Redevelopment Abuse on Saturday, November 7 from 8:30am to 5:00 in San Jose at the San Jose Holiday Inn.

The cost of registration for the conference is $65 and includes breakfast and lunch. We attended one of these conferences a few years ago and it was very enlightening and the food was great! There was a large buffet breakfast and a sit-down luncheon and interesting speakers.

BLD isn’t a drag on budget??????????????

Manteca Bulletin's editor asserts Big League Dreams “pays” the city $380,000 a year! Saves $500,000 in “maintenance.” And the money given to BLD, about $31,000,000, came from a magical pre-existing “pool of money” that’s “not being paid back.” (Yet in the next sentence he says all RDA funds are “borrowed.”)

I want to hear more about this magical pool filled with money that has been discovered in Manteca. I’d like to go for a swim. Especially if it’s money you don’t have to pay back.

How can the city officials make such an outlandish claim, you ask? What they mean is that there’s not a budget line item called “pay back the loan for BLD.” Therefore, that particular money isn’t actually being paid back out of some fund that they decide “counts.” But make no mistake, when you borrow $31 million, it has to be paid back. That “paying back” may occur at some stage and under some convoluted structure before the money reaches the city general fund, but it still costs just as much no matter what word games are used to snow the council and the public.

By the way, about how much is this loan pay back every year? Just estimating with a financial calculator and the current bond rates, the loan payments (debt service) for BLD is somewhere in the range of $1.7 to $1.9 million each year.

The city officials, with the help of the Bulletin, hope you’ll be bamboozled with large numbers. So let me break it down for you:

Let's say you open a pizza shop. You rent the store front and pay employees. The rent and employees costs $1,900 a month. You sell $380 worth of pizzas. Have you made money? Well, you could say you took in $380 or use some other evasive language. But, in fact, you would be losing money, you wouldn’t even be able to pay the rent with the amount of pizzas you sold.

The editor would have us believe that only “critics” of the project count the loan payment, and proponents of the project count the “income.” As if the numbers depend on your feelings. The BLD costs $1,900,000 a year and “brings in” $380,000. Those numbers add up to a loss of over $1.5 million each year and it doesn’t matter if you “like” the BLD or if you’re a “critic.”

I haven’t even gotten to the crazy claim that it saves the city $500K in “maintenance.” First of all, look at how much BLD budgets each year for maintenance. The last time I saw their budget, which was a few years ago, it was just a little over $100K. That’s like your boss asks you how much you spent on gas to go on a business trip, you spent $100 but you tell the boss you spent $500.

But more importantly, the “savings” isn’t a savings at all. Building the thing incurred the cost of maintenance (i.e., if they didn’t build it there wouldn’t be any maintenance costs!). In addition, the logic is wrong, it’s simply a mental construct….

I would explain more but I have to go out and mow the lawn. In fact, I’m saving the city $100/month by mowing my lawn. After all, that’s what it would cost the city to mow my lawn, so I’m “saving” the city that money. hehehe

BLD isn’t a drag on budget

Office of behavior modification

I can’t count the number of times I’ve heard the phrase “we” (who’s we?) “have to get people out of their cars.” Usually it involves not funding road repairs and funding a high tech bus station (multi-modal station) instead. Or creating a subsidized bus service that travels two miles through Manteca and costs roughly $25 each trip. (The passenger pays $1, the taxpayer pays the rest.)

How many times have we heard about incorporating “smart growth” into something they call the city’s “general plan?” It’s about fighting something called “sprawl” and its evil proponents, “the developers.” Here, the “sprawl” is defined as what occurs precisely after the point in time that I move in to an area (i.e., sprawl-fighters want to move to an area and build a home for themselves, but it’s “sprawl” if anyone else does the same.)

Paradoxically, Manteca has a set of regulations outlawing building small houses and using less than a minimum amount of land while simultaneously providing taxpayer money to certain builders if they build below that minimum. It's called “high density.” Remember “density” is the inverse of “amount of land used.” So the city outlaws building on small lots, then wonders why people aren’t building on small lots, then decides to fix the problem by paying a developer to build on small lots.

Manteca also complains about traffic congestion. And at the same time it builds speed bumps, “bulb outs,” wide medians with trees in the middle of roads, and caps roads with dead ends just yards from the cross street so that road can’t be used to relieve traffic congestion. The policy is to force you to use the congested road. Then they do “studies” before giving out building permits and charge homebuyers huge extra taxes to fix the “congestion” they say they “cause.”

Come to think of it I think I just answered my own question. It’s the “cycle of money/laws/favors” in Manteca. But that really wasn’t the point of this entry, I just found the following article by George Will interesting:

Why Ray LaHood Is Wrong Newsweek George F. Will Newsweek.com

Economist suggests Mantecans perhaps crack open a book now and then.

This week's (15 Sep 08) Manteca City Council highlights:

• Manteca economist determined the city is populated by primitive ignorant villagers.
• Whole Foods market and Trader Joe's not interested in locating in Manteca because we are too uneducated.
• The Council approves of study and calls it much better than any other they've seen. Mayor Weatherford praises study.

Shown above (click to enlarge) pages from the study. The chart at right lists the requirements for various stores including Whole Foods Inc. and Trader Joe's Inc.

In response, Councilman Snyder regaled the meeting participants with a fascinating story of how he went to a restaurant in Toledo and even though they served hot dogs on paper plates it was a great success because Jamie Farr mentioned it on a TV show. He suggested, "that's what Manteca needs."

We have to pay businesses to open stores here?

A few months ago, we were told the "Lifestyle Mall" was going to be paying us. (Lifestyle mall paying special tax, October 16, 2006). Now, just a few months later, and after the election that asked for the taxes to be raised, we find out (funny thing) actually we will be paying them. Evidently, the Bass Pro Shop didn't like the idea that the sales tax in Manteca is the highest in San Joaquin County.

It's it curious the way the headlines before the election told us how we don't have a penny to spare, there's not enough money for the police and fire departments, and developers have to pay special extra taxes.

Now we find out the city was planning to pay the mall project developers about $1.7 million a year in the form of a "rebate" of the sales tax! Surprise!

By the way, this was pushed through the city council so fast that if you went on vacation on Friday two weeks ago, and came back last Monday, you would have missed it. That's right, it was announced three days before the Monday night regular meeting (the minimum time required by law) and then passed with the second reading the next Monday at 9am, again the minimum time required. (Actually, five days is the minimum but that would have been on the weekend.)

Imagine spending as much money as was spent on the "Big League Dreams" ballpark and introducing the idea and passing it all within a week! The public debate over the Big League Dreams project took years. (Maybe that's what they were trying to avoid?)

I asked the mayor and council about this and how long they knew about the plan to pay the mall developer $61.7 million. The mayor said they'd been working on it in secret closed session, for "what, like two and a half years?"

In other words, they knew they were planning to give this huge gift to the mall developer before the election. While they were telling us how poor the city was, and begging people to please vote for the new sales tax and how critical it was to your children's safety, etc. -- they were secretly planning to give nearly half of the money collected by the new tax to this wealthy developer!

There's no way that anyone would have voted for the new tax if they knew half of it was going to be given away to "entice" a Bass Pro Shop to move here.

Developers: Don't let any competitors build houses!

Notes on council comments, 18 Dec 06:

Introduction:

In Manteca, a "Community Revised Growth Management Program" (CRGMP) restricts the number of new houses that can be built to about 3.9 percent each year. The stated purpose is to "help" the community, preserve the "small town culture" and control or limit traffic "congestion" and other high-minded principles. However, as Milton Friedman explained years ago, you shouldn't judge a government program by its intentions, but by its actual effects. The actual effect of the CRGMP, or "growth cap" is to limit the number of houses that can be built. This serves two main purposes: First, the city wants to get large sums of money for the permits to build each house. (The mayor made these comments a few yeas ago, he said "we're in the driver's seat" and we can demand almost anything from developers, they want to build so badly.) A secondary benefit, for the developers is that limiting the number of houses that can be built helps them demand higher sale prices for their houses. This would help explain why the developers tend to complain a little, but generally go along with the "growth cap" scheme.

The problem with these two effects is that they, as with almost any interference with the free market, the law creates winners and losers. The newspapers and press tout the rising home prices as nothing but a good thing, for the most part. The same is true of the city officials. But there is another side to the issue. For every developer that is able to command a higher than market price for their houses, there is a loser, the individual who wishes to purchase a house at a lower price.

The city even gives lip service to the goal of providing "affordable housing" and has created and proposed programs that cost the taxpayers millions of dollars with the stated goal of providing low cost housing. These "affordable housing" programs are in direct conflict with the "growth cap" policies. One arm of the city attempts to lower the cost of housing, and the other attempts to raise the cost of housing. All at taxpayer expense!

Last month, one of the city's prominent developers asked to have their permits to build houses extended. The spokesman talked about "delays" and "paperwork" first, but then added, almost as an aside, that the market has taken a downturn. He talked about how, darn it, those papers sat on someone's desk for months and we just never got to build the houses in the two years the permit is valid. But I submit that it is the market conditions that is really the issue. Papers don't sit on desks gathering dust when there's millions of dollars to be made. But when the market turns down, as it always does at some point, then perhaps papers can sit on desks gathering dust. In other words, the delay was not primarily caused by paperwork. The delay was deliberate and an attempt to hold off building houses when the price wasn't high enough, and to wait until prices became higher.

This is, of course, a decision the developer is free to make. It's a gamble. The developer knows how much time is left on the permits and he can makes a judgment to build or not build houses. The same is true when a developer requests the permits. They are extremely costly to obtain and the developer has to make a business judgment. Will the cost of the permits be "worth it" considering the current price of houses and the future risk?

When the housing market (bubble) was booming, developers were falling over each other to obtain those permits. There was so much money to be made, they competed with each other with more and more elaborate housing plans, larger houses, more ornate "amenities" being promised; all in the hope of beating a competitor and obtaining the coveted permits. Other smaller or lower cost builders were out competed for the permits.

The developers who made such grand promises to the city in return for the rare and coveted "allocations" were making a decision. Like all business decisions, there are benefits and risks to consider. There's never a guarantee that any business venture will be profitable. When the developer entered into the agreement with the city, they knew the permit cost a certain amount. It was valid for two years. They had to consider the possible amount of profit that could be made, and had to consider the risk of what would happen if housing prices dropped. There was never any agreement to "fix" things and go back and re-negotiate if the market didn't go their way!

You could think of it just like buying or selling anything else. The stock buyer doesn't know for sure the price of the stock will go up. It might go down. But the buyer makes his best judgment. If he guesses right, he makes lots of money. But what if he guesses wrong? Should the government or city council tell the buyer, "we'll fix market" to make it right for you? In the case of houses, there are two sides, the developer (seller) and the buyer. If the city steps in to try to "help" the sellers, they end up hurting the buyers who want to buy houses at lower prices.

The lower housing prices are good for some, bad for others. The city should not be taking a position that favors one side of the economic equation (the house sellers) and harm the other side (the house buyers). Why would one group deserve favor and the other group deserve to be harmed?

The talk at the Council meeting was about how they want to "stimulate" the market. This is confusing talk. Nothing could be further from the truth. They mentioned how important it was to "keep the builder working!" But the effect of the policy is to reduce, not increase, the amount of construction! They are reducing the number of building permits available. That does not help the builder to build more, it prevents the builder from building. The one it "helps" is anyone who owns the development firm and doesn't want any competitors to get permits. That is not "stimulating" anything. The home buyers also will be spending more money on their home instead of spending it on any other business in Manteca. In a way, trying to "support" the price of houses hurts a lot of people, not just those who wish to buy a house, it hurts every business because their customers must now pay more for their houses instead of something else.

The new proposal:

The plan is complicated, but I'll try to simplify it. The plan is to "extend" all the current permits by an additional year. This helps the holders of the permits because what they can do is "hold" the permits for another year and hope that the prices of houses goes back up, then they can possibly build houses when the price is better for them. The drawback of this is that there will be no permits available for any others who want to build houses. There may be lower cost developers who want to build, and would be willing to apply for the permits. Competitors may be able to get the permits at less cost, and not need to promise as many "amenities," etc. Also, they may see an opportunity to build and sell lower priced houses. They may, correctly, decide there's pent up demand on the lower end of the financial scale, and this presents an opportunity for selling lower cost housing. This would provide "affordable" housing at no taxpayer expense!

But the current permit holders don't want that. They want to "hold" all the permits. By holding the permits, they are, in effect, stopping every competitor from building houses at lower cost! This is not good for the people of Manteca. Many people need housing! There are many who would love to buy a house at lower cost. But the city, in attempting to be "nice" to one group, the developers, and give them "help" will end up hurting those who want an affordable home.

The plan also includes adding a few hundred allocations. The justification is silly. The argument given is that the new police headquarters is allocated 60,000 gallons per day, but will probably only use 6000 gpd. So, then that leaves 54,000 gpd "available." But there are other buildings around town, like department stores and things like that, that use a fraction of what the city rules estimated. There are millions of gpd "available" if that is the standard. It appears that the city planner simply picked a figure of 54,000 gpd so that it would permit about 250 new housing permits.

In other words, the bottom line of the plan is to let the developers hold their expiring permits, leaving none available this year. So, instead of having 890 permits available this year, the new plan will hand out about 250 "extra" permits. But whatever they are called, instead of giving out 890 permits, they will give out 250. This is an obvious attempt to raise the price of housing by making it scarce or harder to build a house! It's an attempt to "fix" what they see as a "problem," namely, houses becoming affordable.

For the first time, the city staff actually acknowledged this. For years, they have been saying the reason for the housing permits is for those previously mentioned reasons, to "control growth" for "the good of the everyone." In the meeting, the assistant city manager (McLaughlin) talked about "the price of housing" and how the goal is "to try to stimulate the ... uh... economic" something. What she was saying, or trying to avoid saying was that the goal is to limit the number of permits available, in the hope that this will make housing more expensive, and in turn, make the developers happy, regardless of how this may be bad for everyone who's not a developer.

Which finally leads to my objection to the whole thing. The city government should not be hurting the people who need affordable housing, in order to grant favor to politically well connected developers. The people shouldn't have to pay extra taxes to help "provide" affordable housing at the same time the city is creating the shortage of affordable housing!

Last, to add insult to injury, there is talk that the much touted fire station may not be built. The reason is that the developer promised to help build the fire station, and if he doesn't get this special favor, he won't build the fire station as he promised. The city just passed a controversial sales tax increase, Measure M, and promised the voters if they approve it, there will be a new fire station by July! By July! And now, we are being told that "the fire station will be built on schedule, but, oh, the schedule has been changed, now it may not be until ... get this... 2014. The year 2014! Incredible!

In fact, at the previous City Council meeting, when the issue was first raised, the Fire Chief of Manteca gave a presentation. Why the fire chief was talking on behalf of the developer is anyone's guess, I didn't ask that question. He showed maps of how needed this fire station was, and urged us and the City Council to "give the developers what they want... we really need this fire station! Live are at stake!" But the people of Manteca had just voted for Measure M, raising the sales tax to 8.25 percent and were promised the fire station if they voted for it! This is an outrageous betrayal of the public trust.

As a side note, if you look at those maps the Fire Chief provided (I'll have to scan those in) you can see that only a small portion of the "3000 homes" outside the 5 minute response time will be helped by the addition of this new fire station. Only houses in the northwest section of the city are helped by the new fire station. There are huge new developments in the southwest and southeast of the city that will go "without" even with the new fire station, as well as a neighborhood in the northeast. This wasn't mentioned when the city leaders promised that the measure M tax increase was "needed." They mentioned how there were 3000 or 2000 houses far from a fire station, but they didn't mention that even with the new fire station, there still will be thousands of houses that won't be helped at all by one fire station in Northwestern Manteca. (Yes, thousands. They are still building in those other areas, meaning there will still be thousands of houses outside the 5 min. response time even if or when the new station is built) (That figure of 2000 or 3000 houses is also in dispute. That's a subject for another article. The last count was really1,979 homes outside the 5 minute range. But I digress)

Along the same lines, the city backed "citizen group" that campaigned for Measure M repeatedly said "We have the money to build the fire station, we just can't afford to staff it!" They repeated that many times. Yet no city official corrected that. (The city disputed things I said about Measure M, even though it turns out I was right, but that's another story). After promising the new fire station, now we find out that it "depends" on giving special favor to some developers!

OK, one more point. The developers were big contributors to City Council candidates, and, maybe most importantly, all of the largest developers gave cash to the "Measure M" campaign group. Why would developers want to give money to raise the sales tax? Raising the sales tax doesn't help you sell houses. People are slightly less inclined to buy a house in a town that has a high sales tax verses a town with lower sales taxes! So why were the developers giving thousands of dollars to get Measure M passed? Could it be they are now getting their payback in the form of special privileges? They get to hold their permits and stop competitors from building houses for the next year. It's brilliant.

Redevelopment money to remove poor people:

Poor people say "Thank you for removing me."

That's what's likely to happen. If I were these people, I'd be a little nervous.

I find the comments from the people in the mobile home park to be incongruous and hard to explain. If I offend, I'm sorry, but this has to be said: People -- Don't you realize the city is trying to throw you out of your homes?

The city spends "redevelopment" money on an area to "spruce it up" because the city is trying to make the land more valuable. The increased property values, in theory, are supposed to cause property taxes to increase, paying back the redevelopment loans (bonds) . Yes, it's a crazy way to fund something, but that's another story.

There's a plus side and a minus side to increasing property values. It's great if you are one of the ones who owns property there. It may increase in value, giving you a windfall. On the other side of the coin, if you rent a space in a pre-fab home park, you could see either one of two things:

• Either your rent will skyrocket
• Or, the whole place will be sold to some commercial interest and you'll be just told to leave.

Notice I didn't say "that might occur" if the property values rise. I said it will occur because that is what must occur because of economics.

It's hard to make the argument that it would be better if we left the place "run down." That sounds like the argument I'm making. I don't know the answer to that. But the point is that the Moffat Boulevard redecorations serve someone's interest. The city's, big developers, commercial interests, real estate agents, and others. Bascially everyone except the people living in the mobile homes interviewed for The Record article! If I were one of those people, I'd want it left just as it is. A sidewalk might be nice, but if it means being thrown out of my home... I think I'd rather deal with some puddles on the road than either have the rent doubled or tripled or be homeless entirely.

There's also something odd in the statements about the actual usefulness of the "sidewalks." It can't possibly be to reduce the traffic hazard. The Tidewater Bikeway runs right along the railroad tracks on Moffat. You don't have to be on a bicycle to use the bike trail, you can walk or roll in a wheelchair, jog or whatever. If there's one place in Manteca that actually doesn't need a sidewalk (for utility reasons) it's Moffat Blvd. They already have the world's best walkway there. All the talk about having to walk by the side of the road and the hazards is just nonsense, why people would make those comments is hard to explain. The bike trail is right there in front of that mobile home park. It couldn't be any closer. So I don't get it.

Why isn't ordinary tax money being used for these "improvements?" Why is it necessary to borrow money? There's something odd going on. And what is also odd is that here, the redevelopment money is being used to reduce so-called "affordable housing." It's a great example, in a perverse sort of way, of how government works against itself. The redevelopment money is supposed to be used to increase "affordable" housing, and here, the same program is being used to decrease "affordable" housing.

Except that the people being thrown out of their homes don't know it yet. And they seem to be thanking the city for finally, after all these years, coming in and making it impossible for them to continue to live there. It's like they are saying "it's about time the city did something to make the place too expensive for me to live!" Unbelievable.

The best case scenario is that the redecorations will do nothing, and just be a big waste of redevelopment money. That would be the best case for the poor people in the mobile home park. Because if the area does "take off" with commercial development, well, pack your bags. Just ask the people in that little mobile home park on Main Street near Sutter. If you can that is, they may be gone already.

Redevelopment: The Unknown Government

On September 30, Joe and I had the opportunity to attend the 11th Annual Northern California Conference on Redevelopment Abuse sponsored by Municipal Officials for Redevelopment Reform (MORR) and moderated by Orange County Supervisor Chris Norby, a vocal critic of redevelopment and eminent domain abuse. It was a day-long conference with speakers ranging from attorneys specializing in eminent domain cases and citizen activists to ordinary people who found themselves victims of eminent domain "takings" of their private property for commercial use. One of the speakers was John Revelli from Oakland whose 56-year old family business was declared blighted and taken by eminent domain for a city-subsidized real estate developer planning to put apartments and condominiums on it. Though his case appealing the eminent domain taking is still moving through the courts, the city of Oakland has already demolished his building and erected a new structure, something called "early taking." Basically, a redevelopment agency can declare your property blighted, claim it with eminent domain and while you're going to court to appeal it, they can physically take possession of the property and demolish your home or business and erect new buildings. There is no due process under the 4th and 5th Amendments when the government wants your property.

We hear about the Manteca Redevelopment Agency a lot. After all, the City Council members are in fact the Redevelopment Agency. At city council meetings, they simply announce that they are now the Redevelopment Agency with a bang of the gavel and open the meeting within a meeting when there's agency business to conduct. Did you know that the Redevelopment Agency has the power to declare any property "blighted" and that once an area is "blighted" that future increases in property taxes are diverted from that point forward to the local Redevelopment Agency? The property tax increases are siphoned off before they ever get to the city's general fund or the county's coffers or to the school district where property taxes are supposed to go. This is called "tax increment diversion." An interesting side effect of declaring property "blighted" is that once the property is so deemed, it remains "blighted" forever. There is no procedure in place to "un-blight" an area, meaning that the tax increment diversion on that property continues forever. Pretty sweet deal, huh?

The lure of declaring property "blighted" is so strong and the rewards (to the city) so great, that Joe recently found a document reporting how Manteca city employees direct consultants to actually drive around looking for any evidence of blight so that the Redevelopment Agency can expand its tax base (specifically see footnote 4 of the document). With the power of eminent domain behind it, the Redevelopment Agency can buy property that they have devalued through declarations of "blight" at a very attractive bargain price. If the stubborn property owner won't sell, they can use eminent domain to seize property for a "better use" (read "retail stores"). Cities like Manteca LOVE retail stores because they get a portion of the sales tax charged and if Measure M passes in November, they'll get even more.

Have you heard that the Redevelopment Agency funds that are spent on "improvements" around Manteca are not tax dollars so there's no need for anyone to be concerned? Any time someone in the government tells you that the money they're spending is not tax dollars, that should raise a red flag and you should be concerned. A lot. Did you know that the Redevelopment Agency has the power to issue bonds, which the taxpayers must repay, without ever putting it to a vote? That's a lot of power to wield and cities all over California and the country are doing just that. It's our tax dollars that fund the Redevelopment Agency, plain and simple. Any claim that redevelopment money isn't tax money is a lie.

MORR has published a booklet called "Redevelopment: The Unknown Government" which is available online. Anyone who is remotely interested in what local governments are doing with taxpayer money or in eminent domain should read this publication. It's written in plain language, you don't need a law degree to understand it. There's also a Spanish language version available. It has also has some great cartoons!