Judge Backs Use of Tax Revenue for Carson Renewal

A Los Angeles Superior Court judge has upheld a decision by Carson officials to channel into city redevelopment projects what could amount to $250 million in tax revenue in the next 40 years.

Despite arguments by Los Angeles County attorneys that Carson officials erred in designating 640 acres on the east side of the city as redevelopment territory, Judge Norman R. Dowds ruled last week that Carson officials had sufficient evidence of blighted conditions necessary to qualify for redevelopment tax assistance under state law.

“If it isn’t appealed, this means we can get the show on the road with our redevelopment,” said Mayor Kay Calas. “There are a lot of areas that really need cleaning, with the (Johns Manville) asbestos site and the junkyards in that area. . . . Some cities misuse their redevelopment, but Carson didn’t. We need the redevelopment.”

The county Board of Supervisors will decide whether to appeal the court decision within 60 days, said Paula Snyder, deputy county counsel. “Our legal basis for appealing is certainly a strong one,” she said.

Renewal Hastily Approved

During a court hearing last Friday and in previous trial briefs, county officials argued that redevelopment assistance is not needed for all 640 acres of Carson’s eastside project area. Moreover, the county asserted, Carson officials hastily approved their plans--in what the county called an effort to circumvent the tightening of California’s redevelopment law--without making adequate findings of blight and financial need.

The county filed suit against Carson in September, 1984, about two months after the city created the redevelopment area.

“They decided they wanted redevelopment first and then they hurried around to follow the statutes,” Snyder said. “There were a number of questions posed by the redevelopment law that the city never considered. There was no fact finding. There was no mention of whether the city or the private land owners had money to finance these improvements.

” . . . There’s a beautiful new business and industrial complex in the middle of this project, and all of a sudden the city announces that it’s redevelopment,” Snyder said. “In essence, this was a way for the city to subsidize private development with county tax dollars.”

Adequate Findings

However, Carson attorneys successfully argued that the city made adequate findings of blight and needed the special tax assistance to redevelop the area.

“We did make findings on all of those issues,” said Mitchell Abbott, the Carson-appointed attorney for the case. “The court agreed that our findings were adequate. . . . The only reason the county is filing this is for what they perceive as a threat to their tax revenues.”

Abbott added, “The county will not lose a dime of what it is (currently) getting. The redevelopment only diverts the increase in tax revenues . . . to the city.”

Under state law, cities may designate blighted areas as “redevelopment projects,” which freezes the property tax base for those neighborhoods. As property values increase, cities may used the additional revenue that is generated for improvements in these blighted areas.

That tax revenue would otherwise go to the county general fund and several other agencies, including the county flood control and fire protection districts and the Los Angeles Unified School District. (The county suit was also filed on behalf of the fire and flood control districts. School districts traditionally have not become involved in such disputes, Snyder said, because the state compensates them for any loss of tax revenue.)

More Than $250 Million

The exact amount of tax revenue at stake in the lawsuit is difficult to gauge, but county and city officials estimate that it could total more than $250 million during the next 40 years, although the redevelopment project could last longer than that.

“The county is in a fiscal position of having to seriously evaluate these kinds of projects,” Snyder said. For the second time in three years, the county has not been able to increase the salaries of its 70,000 employees, while reserves are “far below what is prudent,” said county financial analyst Virginia Collins.

The county has lawsuits pending against three other cities--Inglewood, Rancho Palos Verdes and Hidden Hills--for their redevelopment actions, Snyder said.

The loss of future tax revenue to the county in the Carson case, Snyder said, would probably most severely affect fire protection and flood control districts, which may be forced to provide additional services to the redevelopment area but will not receive additional money for doing so. “But the county has so many services, it’s difficult to say where the loss of tax dollars will be felt the most,” she said.

If no appeal is filed, last week’s decision will allow Carson to begin a block-by-block survey of the redevelopment area and set priorities for improvements, said Community Development Director Patricia Nemeth. After specific improvements are identified, the city will begin issuing bonds to finance them, she said.

Land Acquisition

The city’s first priorities may include land acquisition and rehabilitation in declining commercial and industrial areas along Alameda Street, Nemeth said.

The odd-shaped Carson redevelopment area is bounded roughly by the Dominguez Channel, Alameda and Carson streets and Wilmington and Sepulveda boulevards. Much of that area is made up of abandoned and substandard structures and vacant lots. Former garbage dumps or contaminated waste sites make up more than 200 acres of that area, city officials say.

The redevelopment area also includes the 135-acre Watson Corporate Center, a collection of new business and industrial buildings and vacant properties for which similar development is planned. Watson Land Co. owns most of the land included in the corporate center.

“The need for redevelopment was so obvious and the blighted conditions so palpable that it’s difficult for me to imagine a court coming to a different decision,” said Abbott, the Carson attorney.

Second Lawsuit Pending

Moreover, Abbott maintained, Carson’s position is as strong in a second, still-pending county lawsuit over another redevelopment project. That suit, also filed in September, 1984, is expected to be decided at a hearing on Dec. 2. It involves about 1,000 acres on the northwestern edge of the city. The county estimates that $500 million in future tax revenue is at stake in that case.

“I think it is as good a case,” Abbott said. “The area has different types of blight . . . but on the merits, it is equally strong.”

County officials, however, contend that they still stand a good chance of winning the second lawsuit, which also is set to be heard before Judge Dowds.

“This doesn’t necessarily mean we’re going to lose the next one,” Snyder said. “I do think the facts are sufficiently different so that we still have something left to argue about.”

In addition to the two redevelopment projects contested by the county, Carson has two others that were established in the 1970s. The four areas total about 3,000 acres, or 23% of the city.

CARSON’S EXPANDED REDEVELOPMENT Carson expanded its redevelopment plans in July, 1984, with Project Area No. 3 and Amendment to Project Area No. 1. Los Angeles County filed suit over those redevelopment plans because it said the renewal projects would cost the county millions of dollars in tax money over the next 40 years. Carson last week won the county suit for Project No. 3 and will use the redevelopment money to improve that blighted property. A court decision on the amendment is expected after a hearing on Dec. 2.