Redevelopment riles up property owners

Deirdre Newman

The possibility of adding 434 acres to the downtown redevelopment

zone has raised numerous financial worries from industrial property

owners, whose fears range from restrictions to losing their property

outright. It has also created concerns about economic effects on city

services and the Newport-Mesa Unified School District.

On Monday, the Planning Commission adopted preliminary boundaries

for an odd-shaped area roughly bordered by 15th Street, Whittier

Avenue and East 19th Street that may be added to the zone. On Feb.

10, the City Council -- acting as the city’s redevelopment agency --

will vote on these boundaries.

While one of redevelopment’s goals is to improve the tax base

within the overall community, even city leaders are unsure if the net

effect will be positive.

“I have some serious reservations,” Planning Commissioner Eleanor

Egan said. “I think we need to look into it very carefully and listen

to what everybody has to say and make sure all the members of the

agency know what they’re getting into.”

Taking a look at some of the city’s previous redevelopment efforts

also provides some insight into how successful the latest attempt

might be.

THE PROCESS OF REDEVELOPMENT

If the preliminary boundaries are approved, independent

consultants will begin an in-depth assessment of blight in the area,

gauging properties on physical and economic conditions.

Some of the economic criteria relate to depreciation or stagnation

in property values, but there are no guidelines in these areas, so

it’s basically up to the consultants to determine, said Mike

Robinson, the city’s planning and redevelopment manager.

The final boundaries could be established within eight to 12

months, he said.

During that time, the redevelopment agency will also delineate

what kind of land use it would like to see in the area. The agency

has not yet decided if it will invoke its eminent domain rights and,

if so, on what types of properties they will be used.

If the area is declared a redevelopment zone, property taxes will

be frozen at the rate of the current fiscal year and 70% of future

tax increases are redirected to the redevelopment agency. Entities

like the school district and the city’s general fund will still

receive their same portion of the base rate, but will have to share

the other 30% of the increases.

PROPERTY OWNERS’ FEARS

Many industrial property owners say they do not believe their

properties are blighted economically.

Assessed values of four randomly chosen industrial properties have

all gone up since 1985, according to the county assessor’s office.

Many owners contend the market value of their property is

significantly higher than the assessed value.

Some of the industrial property owners are worried that inclusion

in the redevelopment zone will severely limit their rights.

“When we’re under the redevelopment umbrella, there’s a whole new

set of regulations,” said Bill Modick, who has owned property on the

Westside since 1966. “They are unnecessary prejudicial restrictions

that will greatly limit our freedom.”

Roger MacGregor, who has run MacGregor Yachts on Placentia Avenue

since 1969, said he has no plans to expand, but expressed concern

that if he wants to make any improvements within his walls, he will

have trouble obtaining permits.

Also, once a property is pegged as part of a redevelopment zone,

an exception to the title is recorded, letting prospective buyers

know.

“If you have two properties, and one has eminent domain and is

declared blighted and one doesn’t, which one would you buy?”

MacGregor asked. “Anyone with common sense knows you would buy the

one without it.”

Some owners are wary that they will not be fairly compensated for

their property if the city exercises its authority of eminent domain.

The traditional process is for the city to hire an independent

appraiser to assess the property and come up with an amount. If the

owner doesn’t feel that amount reflects the worth of the property,

they can pay for their own appraisal. The city compares the two and

decides if it is willing to negotiate. If not, it’s up to the courts

to decide.

But owners fear that they will be caught in a catch-22 created if

redevelopment becomes a reality. They are afraid once their property

is deemed blighted, the property value will plummet and they will be

forced to sell it for less than it’s really worth, MacGregor said.

MONEY THAT WON’T GO TO THE CITY OR SCHOOLS

Because most of the increase in property tax value over the base

is redirected to the redevelopment agency, other entities that rely

on those funds will see a decrease in their share.

“The loss of incremental taxes for schools, land, police and fire

will be severely reduced,” said Mike Evans, who owns a plumbing

business on Whittier Avenue.

Also, 20% of money gained through redevelopment is required to go

to low-income housing. That kind of development does not

traditionally provide as much property tax to the city, Egan said. To

compensate, the city either has to cut services to the rest of the

city or squeeze in more retail outlets, she said.

“Reducing the net revenue to the city is not the way to get

potholes improved because street improvements are funded by the city,

not the redevelopment agency,” Egan said.

The Newport-Mesa Unified School District would also receive a

smaller portion of the property tax increase.

Assistant Supt. Paul Reed said it wouldn’t be a significant loss

because the city hasn’t budgeted the funds yet.

PAST DEVELOPMENT EFFORTS

Triangle Square and the Costa Mesa Courtyards are two of the major

projects the city has redeveloped in the past. Triangle Square has

had some problems retaining some of its lessees.

Some say these are two prime examples why the city should not get

involved in the redevelopment effort at any cost.

“Every lame property the city has taken has fallen apart,” said

Tom Thompson, who owned a business in Costa Mesa for many years.

“They need to redevelop what they’ve redeveloped and make it

developable.”

A NEW TWIST

In the past few months, there has been a new development that

could affect the city’s redevelopment agency and how the tax

increases are distributed.

As part of his proposed 2003-04 budget, Gov. Gray Davis has

proposed that the state take 52% of local redevelopment agencies’

increase in property taxes. This could seriously hinder Costa Mesa’s

ability to repay its debt, since the agency now owes about $14

million.

Robinson said that at this point, he’s not sure how that would

affect the city’s plans to add to the downtown redevelopment area.

* DEIRDRE NEWMAN covers Costa Mesa and may be reached at (949)

574-4221 or by e-mail at [email protected].