"Nor shall private property be taken for public use without just compensation." Thus the Bill of Rights specifies the only purpose for eminent domain: "public use".

Since then, government has used eminent domain to acquire land for public use. Roads, schools, parks, military bases, and police stations were essential public facilities that took priority over individual property rights. Private real estate transactions, on the other hand, were always voluntary agreements between individuals.

Redevelopment has changed all that.

Under redevelopment, "public use" now includes privately owned shopping centers, auto malls and movie theaters. "Public use" is now anything a favored developer wants to do with another individual's land. Eminent domain is used to effect what once were purely private transactions.

Its use nearly always favors large developers at the expense of small property owners. In a typical redevelopment project, a developer is given an "exclusive negotiating agreement," or the sole right to develop property still owned by others.

Once such an agreement is made, small property owners are pressured to sell to the redevelopment agency, which acquires the land on behalf of the developer. If refused, the agency holds a public hearing to determine "public need and necessity" to impose eminent domain. By law, this must be an impartial hearing. In reality, the agency has already committed itself to acquire the property for the developer, so there is little doubt of the outcome.

Whole areas of cities have been acquired, demolished and handed over to developers to recreate in their own image. Historic buildings, local businesses and unique neighborhoods are replaced by generic developments devoid of the special flavor that once gave communities their identity.

Typical is the experience of Anaheim. Having demolished its historic central business district in the mid-1970s, the redevelopment agency recently hired consultants to help restore the identity of a downtown that no longer exists. "The complete eradication of the traditional business district has left nothing for the community to relate to as their downtown," admits an internal city memo.

Small business owners are compensated and relocated, but often in distant areas far from their established customer base. Cut off from the community that nurtured them, they often cannot survive.

Small property owners have little chance to participate in redevelopment projects. Consultants and redevelopment planners prefer to work with one huge parcel under a single ownership. Entrepreneurs and homeowners just get in the way.

Indeed, one of the definitions of blight is that of "irregularly shaped lots with multiple ownerships," to be solved by "consolidating parcels" for an outside developer to control. The variety of land owners and uses that gives cities their individuality becomes an excuse for expropriation.

Legislative attempts to protect small property owners have all been derailed by pro- redevelopment forces in Sacramento. Eminent domain is defended as a tool of "last resort." Yet eminent domain lies at the heart of the coercion that makes redevelopment possible-and destructive.

Redevelopment is an entrenched special interest. It thrives on contributions from its beneficiaries and from lack of awareness of the general public. Its advocate is the California Redevelopment Association, a Sacramento-based lobby that seeks to protect and expand redevelopment power.

The CRA claims to represent the interests of cities. It is, in fact, a self-perpetuating money machine that reacts against any reforms that would diminish its power. The CRA's annual budget now tops $1.6 million. Its Executive Director draws $156,200 annually in total compensation. Its contract lobbyist will be paid $122,800 this year, though the CRA is only one of his several clients.

The public has no voice in CRA operations or policies. The CRA is governed by its seven officers and a 12-member board. All are redevelopment agency administrators. None are elected officials. The CRA is operated by redevelopment insiders to serve their interests. Good public policy is the last of its concerns.

The real beneficiaries of redevelopment are not local communities, which must bid against each other for corporate retailers. They are not individual citizens, who have seen their property rights eroded as public debts mount.

The real beneficiaries are those employed by redevelopment agencies. Redevelopment staff controls agency agendas and recommends agency actions. Agency members-usually elected city councils-often rely more on their staff than on their own judgement. Though simple to understand, redevelopment is often presented as too complex for ordinary elected officials-and citizens-to comprehend.

The real beneficiaries, too, are the consultants, lawyers, bond brokers and developers who create, finance, advise, build and otherwise make vast sums from redevelopment projects.

They are easy to find. The California Redevelopment Association's 1996 Directory lists as members 25 commercial development companies, 26 bond brokers, 37 law offices and 101 separate consulting firms. Together, they form redevelopment's core constituency and its only profit-center.

Among these companies are California's biggest developers, priciest law firms and some of Wall Street's most powerful brokerage houses. They are relied on by public officials for "expertise" which is always geared to expanding redevelopment power. They are the donors to the CRA's political action committee, which supports compliant state and local lawmakers. Thus, the tax increment is recycled into political contributions.

What also allows redevelopment to thrive is the lack of public understanding of what it is and how it operates. By law, redevelopment agencies are an arm of state government, and thus are not subject to the same public overview as are those of the counties, school districts and cities. This isolation has spawned activities that would never be tolerated by any other government agency.

Clearly, redevelopment is out of control.

Under the thin guise of eliminating blight, it consumes a growing share of property taxes, incurs ever burgeoning debt, spawns sales tax wars among cities and tramples on property rights. Originally created as a temporary measure following World War II, it threatens to become a permanent cancer on California's political and economic life. Ending redevelopment abuses can be approached on four levels:

LOCAL ACTIVISM: If your city has redevelopment, learn more about it and help educate your fellow citizens. Monitor agency agendas, challenge new debt issuances and expansion of project areas. Support local small businesses threatened with eminent domain and facing giant tax-subsidized competitors.

If your city has no redevelopment, use the examples of abuse to keep it out of your city. Wherever you live, support officeholders and candidates who understand redevelopment and can make their own judgements independent of those who profit by it.

LEGAL CHALLENGE: County and school officials must be more aggressive in appealing redevelopment tax diversions. Grand Juries must broaden their probes into redevelopment. As the California State Supreme Court becomes more protective of property rights, eminent domain abuses can be more successfully challenged. A growing number of public interest lawyers are willing to defend small property owners against redevelopment agencies.

STATE LEGISLATION: Redevelopment is a layer of government created by the state, and has no powers other than those granted by the state. Led by Senator Quentin Kopp (I-San Francisco), numerous redevelopment reform bills have been introduced into the legislature. The following reforms must continue to be addressed:

Eminent Domain: Controls must be placed on the widespread abuse of eminent domain.

Sales Tax Disbursement: Some type of per-capita sales tax disbursement would end predatory redevelopment and return cities to an equal footing. Assured of a stable revenue flow based on its population size, cities could concentrate on providing basic services, rather than subsidizing new businesses.

Debt Control: Make redevelopment debt subject to voter approval. This would limit debt issuance and make agencies more publicly accountable.

Mandatory Sunsets: The 40-year sunset law must be given teeth and enforced. If redevelopment agencies truly have eliminated blight, then there should be no further need for them.

Comprehensive Fiscal Reform: A rational and stable method of funding local government must be found, shifting cities back to greater reliance on property taxes and less on sales taxes.

Unfortunately too many legislators and their staffs still do not fully understand redevelopment and see little political gain in challenging it. Its opponents are many, but still scattered and unorganized, while its beneficiaries are vocal and well-funded.

A flurry of redevelopment bills were introduced into the California State Legislature during the 1997-8 session, including three important curbs on redevelopment abuse:

AB 939, authored by Assemblyman Tom McClintock (R-Northridge), This would place mandatory sunsets on agency operations. Redevelopment agencies would be allowed to finish all existing projects, but not commence new ones not already started. Upon completing existing projects, agencies would stay active only to pay off all existing debt, then shut down. All property taxes diverted would then be restored to the cities, counties and school districts. Hundreds of supporting letters from citizen activists poured in, but the CRA orchestrated strong opposition from redevelopment agencies and developers. The bill died in the Assembly Local Government Committee, but only after a lively hearing that observers noted was one of the longest and frankest exchanges on redevelopment abuses the Capitol had ever witnessed.

AB 1677, also by McClintock, this bill would require voter approval of all new redevelopment bonds. This would close the legal loophole which exempts agency debt from voter approval, which does apply to city, school and state bonds. Opposition to this bill came from the CRA, the League of California Cities and from major bond brokerage firms that stood to lose huge commissions from bond sales. The bill also died in the Assembly Local Government Committee.

AB 1835, authored by Assemblyman Tom Torlakson (D-Martinez), this bill would ban using public money to lure an existing business to move from one city to another. The bill struck at the heart of sales tax piracy, intending to end the corporate extortion that pits one city against another for major retailers. Under CRA pressure, the bill was watered down and contained a number of loopholes, but was still strongly supported by MORR as an important first step. AB 1835 passed the Assembly, 48-23, but failed narrowly in the Senate Local Government Committee. Opposition was intense from lobbyists representing developers and retailers who stood to lose millions in public subsidies.

Many legislators still need to be educated about redevelopment by their constituents through letters, phone calls, faxes and testimony before key committees. As new term limits take effect, legislators will hopefully focus more on doing the right thing, and long-term relationships with lobbyists will be less important.

Equally important will be the impact of education advocates, once they realize how redevelopment revenues can be redirected into California's public schools. The combined political clout of the California Teachers Association and the California School Boards Association dwarfs that of the redevelopment establishment.

STATEWIDE INITIATIVE: A ballot measure requiring voter approval of redevelopment debt looks likely by the June, 2000, primary. Proposed by the Paul Gann's Citizen Committee, it would require the same voter approval for redevelopment bonds that exists for school bonds.

The ultimate goal of any initiative must be to disband the redevelopment agencies and return the property taxes to schools, counties and cities.

Opposition to redevelopment is growing and cuts across partisan lines. It includes pro-property rights Republicans and anti-corporate welfare Democrats. It includes conservatives opposed to growing public debt, and liberals opposed to the destruction of poor neighborhoods. It includes free market libertarians and civil rights activists fighting the displacement of minority communities. It includes environmentalists concerned about suburban sprawl and preservationists lamenting the demolishing of historic downtowns.

Public money should be spent to serve and protect the public, not enrich private interests. The $1.5 billion in property taxes currently diverted by redevelopment agencies can be reclaimed to meet real human needs. And there is no greater need than that of our school children.

State government has full powers over all 359 redevelopment agencies in California. Though administered locally, these agencies are legally and collectively an arm of state government, and can be reformed directly by the legislature or statewide initiative.

Building shopping malls, auto dealerships and pro sports stadiums is a proper function of the free market. If there is a market for them, they will all be built, with or without government subsidy. Public education and public safety, however, are a state responsibility.

We, the voters of California, have the power to redirect redevelopment funds back into serving the public, either through our legislative or ballot initiative. We should do so. Redevelopment debt could be paid off by liquidating agency assets, thus freeing up the property taxes to improve local schools and services.

RETIRE DEBT: While long-term indebtedness exceeds $41 billion the actual principal on outstanding tax allocation bonds is only $8.5 billion, and could be paid off completely by liquidating existing agency assets (including cash, investments and real estate). Thus, the debt could be retired now, avoiding exorbitant future interest payment.

PROPERTY TAX RESTORATION: With all redevelopment obligations met, the property taxes ($1.5 billion annually) could be returned to public education and local government. Currently Public Schools receive 57 percent of all property taxes statewide, Counties receive 21 percent, Cities receive 12 percent and Special Districts receive 10 percent (before redevelopment takes its share). Without redevelopment, the restored tax revenues would then be shared accordingly:

Divided among our 5.6 million public school kids, this $855 million boost would lift per-student spending by $153 per year. California's annual per-pupil spending would jump from $5,284 to $5,437; from 32nd to 28th nationally pushing us past Kentucky, Montana, Illinois and Florida. Funding would flow to buy new textbooks, hire more teachers and expand after school programs.

With an added $495 million, cities and counties could hire 7,000 more police and sheriff's officers, buy 20 million more library books, improve paramedic service or expand youth programs. Special districts could upgrade our aging water and sewer systems.

This restoration of revenues for local needs could be done on a per-capital basis, so as not to lock in current county-by-county disparities in property tax allocation. Added, too would be additional property taxes from long-held agency properties now sold and returned to the tax rolls.

The original rationale of redevelopment was to eliminate blight. It was a temporary fix for a temporary problem. Redevelopment agencies were never supposed to hoard an ever-growing slice of property taxes indefinitely. Let them share it now.

More importantly, how better will blight really be eliminated? By building more commercial development? By encouraging California consumers to buy ever more merchandise? Or by better educating our children? What good are new NFL stadiums in San Francisco, Los Angeles or San Diego, if our kids can't read, write, add or subtract?

There is growing bi-partisan consensus for reform in how local government is funded in California. A more rational apportionment of sales and property taxes would end current inter-governmental competition, and stabilize the current creaky system. It would compel commercial development to pay its own way thus reducing fees on new housing. Reclaiming property taxes long diverted to rede-velopment is an essential part of this reform.

When redevelopment is fully understood, change will come quickly. When it is no longer The Unknown Government, policies promoting fiscal responsibility and free enterprise and fair play for all Californians will finally be restored.