Palm Desert Singled Out As Example Of Redevelopment Problems

A state audit of operations at redevelopment agencies in Riverside County, Desert Hot Springs, Palm Desert and 15 other agencies statewide identified record-keeping inconsistencies and other issues that demonstrated a “lack of accountability and transparency,” it was announced today.

Read: California Comptroller’s Report On Redevelopment

State Controller John Chiang’s office conducted the month-long review to determine whether redevelopment agencies were paying for low- and moderate- income housing as required by state law; accurately providing allotted payments to school districts; and not overpaying board members and employees or misapplying the “blighted” designation.

One of the requirements under the California Community Redevelopment Law is that blight exist to justify using RDA funds.

Chiang’s office documented missed payments to school districts, accounting deficiencies, slipshod payroll practices and inappropriate use of affordable housing funds.

“For a government activity which consumes more than $5.5 billion of public resources annually, we should be troubled that there are no objective performance measures demonstrating that taxpayers are receiving optimal return for each invested dollar,” Chiang said.

“Locally controlled economic development is vital to California’s long- term prosperity,” he added. “However, the existing approach — born in the 1940s — is not how anyone concerned with performance, efficiency and accountability would draw it up today.”

The controller’s audit was initiated following Gov. Jerry Brown’s unveiling of his 2011-12 budget plans, which call for a phase-out of local RDAs.

Brown wants the revenue normally transferred to the RDAs to be distributed directly to school districts, cities and counties using an as yet undefined formula. The modification is part of the governor’s plan for paring down a $25.4 billion budget shortfall.

He is proposing that counties and cities seek voter approval before obligating funds for revitalization projects in the future.

According to Chiang, individual RDAs have their own criteria — some very broad — for defining blight.

The audit questioned Palm Desert’s use of redevelopment funds to renovate a four-star golf course. The city’s RDA receives the 10th-highest tax revenue in the state, equating to $4,666 for each of the municipality’s 52,000 residents, according to the controller’s office.

According to Chiang, 10 of the 18 RDAs scrutinized did try to track how many jobs were linked to revitalization projects, but the methodologies lacked uniformity.

Riverside County relied on developers’ projections, while Desert Hot Springs extrapolated from permit and employment records, the audit found.

According to the controller’s office, RDAs’ employees are generally paid at rates comparable to workers in other government services. But the report showed redevelopment dollars were not routinely distinguished from general fund payrolls to make it clear the RDA money was being spent specifically for purposes of redevelopment.

In some cases, funds strictly allocated for Low & Moderate Housing projects were withdrawn for other uses.

Desert Hot Springs allocated $162,000 in housing funds for code enforcement, according to the audit.

“The lack of accountability and transparency is a breeding ground for waste, abuse and impropriety,” Chiang said. “In whatever form local redevelopment takes in the future, the level of oversight and openness must be consistent with the amount of public dollars entrusted to their care.”

Riverside County Supervisor John Benoit, whose Fourth District covers most of the eastern county region, testified before a state legislative committee last month about the potentially dire consequences of ending redevelopment.

The former state legislator said around 625 redevelopment projects have been completed in the last few years, accounting for roughly $1.5 billion annually in economic activity locally.

Between 2007 and 2009, 8,707 jobs were created as a result of redevelopment. There are 37 projects in the pipeline, including road improvements, parks, libraries, affordable housing complexes and public safety facilities.

Riverside County’s redevelopment agency, with about $100 million in annual revenue, is the state’s seventh-largest.