California Land Grab Threatens Cities from Oakland to LA Suburbs

By Bloomberg | Examiner (Washington, D.C.), The, November 13, 2013 | Go to article overview

California Land Grab Threatens Cities from Oakland to LA Suburbs


Bloomberg, Examiner (Washington, D.C.), The


Cerritos, the Los Angeles suburb that lays claim to having the world's biggest auto mall, is one of 36 California cities, including Oakland and bankrupt San Bernardino, facing a state land grab that mayors say will devastate their finances.

Controller John Chiang has ordered Cerritos, a city of 50,000 about 20 miles southeast of Los Angeles, to liquidate $171 million in assets including land leased to dealers at the auto mall and a performing-arts center. The city's redevelopment agency held the property before the state dissolved blight-fighting districts in 2011.

Chiang, a Democrat, said three dozen cities improperly took over similar assets when Governor Jerry Brown, a 75-year-old Democrat facing a budget gap, scrapped their development agencies to free about $1 billion. Cities were to sell the holdings to repay bonds for the projects and use the rest to help cover state obligations to schools, health care and public safety, according to Chiang's website.

"This is very, very serious," said Mayor Bruce Barrows, a 66- year-old Republican whose community depends on leases of city-owned redevelopment land for almost 10 percent of its $79 million general- fund revenue. "As soon as you take away our business model by fiat in Sacramento, our cash flow goes away."

San Bernardino officials cited the loss of redevelopment funds as part of the reason they sought Chapter 9 protection from creditors in August 2012. Barrows said bankruptcy in Cerritos would be a "worst-case scenario" that would take a decade or more to play out.

Auto Mall

The Cerritos Auto Square, described as the world's largest auto center in the city's continuing disclosure filings, has side-by- side dealerships for 23 marques from General Motors Co.'s Chevrolet and Ford Motor Co.'s Lincoln to Tata Motors Ltd.'s Jaguar and Daimler AG's Mercedes-Benz.

Chiang ordered the city to sell the land under dealers for Jaguar/ Land Rover and Kia Motors Corp., as well as the Cerritos Center for the Performing Arts, a 2,000-seat venue that has hosted singers such as Smokey Robinson and Chris Isaak.

Redevelopment helped to transform Cerritos, incorporated in 1956, from dairy pastures to a modern suburb with a 100,000- square-foot library, 40,000-square-foot senior center, 9-hole municipal golf course and other amenities, City Manager Art Gallucci said.

Redevelopment agencies were set up to reduce blight by helping finance road, sewer, lighting and affordable-housing projects in designated areas. The agencies received property-tax revenue increases resulting from new development, known as the tax increment. About 40 percent of Cerritos's 8.9 square miles was encompassed by redevelopment zones.

Farms Transformed

Gallucci, who has worked for the city since 1971, said redevelopment funds bought 100 acres to begin developing the auto mall in the late 1970s, building roads and electrical wiring to accommodate dealers. …

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California Land Grab Threatens Cities from Oakland to LA Suburbs
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