Bell Gardens Forced to Sell Shopping Centers

February 4, 2016 by · 1 Comment 

Before Ross, Marshall’s, Starbucks and Petco opened their doors in Bell Gardens, the area around Florence Boulevard and Eastern Avenue was nothing more than a collection of vacant lots and rundown buildings.

Drugs and crime were prevalent in the area, which also happened to be home to one of the largest adult bookstores in the region. The city tried unsuccessfully for years to close the store down, but in the end, redevelopment money is what pushed out the store and it’s undesirable customers, Bell Gardens City Manager Phil Wagner told EGP.

Lea este artículo en Español: Bell Gardens es Forzada a Vender Centros Comerciales

Today, two busy shopping centers sit at the intersection of Florence and Firestone, drawing thousands of customers from Bell Gardens and surrounding cities to spend their money in the southeast city. It’s been a vast improvement on many fronts for the predominately working-class southeast city, from providing jobs to shopping convenience and revenue for city services.

But now, Bell Gardens is being forced to sell off the Los Jardines and Village Square Shopping Centers and to give 91% of the money generated from the sale to the state. It’s part of a negotiated settlement reached in the aftermath of Gov. Jerry Brown’s and State Legislators’ disbanding of the 400 or so redevelopment agencies across California.

For decades, redevelopment agencies (RDA) helped cities like Bell Gardens revitalize their communities by providing funds for projects ranging from affordable housing to commercial developments and government facilities. Funding for RDA came from loans from the cities themselves, bonds and property taxes generated by the agency’s investments.

“If you look at these shopping centers [in Bell Gardens] there’s a possibility none of these would be here without the RDA,” Wagner points out.

Facing a crippling budget deficit, the governor and state leaders in 2011 decided to eliminate all of California’s redevelopment agencies and keep the in state coffers. “With the stroke of a pen,” cities, already struggling with tight budgets due to the recession, saw their funds to combat blight wiped out, Wagner said.

Brown argued that the state could no longer afford to finance the agencies and insisted the money would be better spent on school districts and county services.

An audit at the time by State Controller John Chiang found widespread accounting and reporting discrepancies at 18 RDAs across the state, fueling support for shutting down locally run redevelopment agencies. The audit found examples of spending abuses and Chiang questioned the effectiveness of RDA’s mission to combat blight.

The policy shift stopped new money from coming in for redevelopment and required that any money still in the redevelopment agencies and city-owned properties purchased with redevelopment funds be liquidated and turned over to the state.

Local municipalities criticized the decision and tried to stop the change, but failed.

In the years since, cities across California have been negotiating with the Dept. of Finance – charged with reviewing any transactions by the now defunct RDAs – to protect their investments.

Finally, “we’ve had to bite the bullet,” City Attorney John W. Lam told EGP.

Bell Gardens must now sell seven of its RDA-owned properties, including the two shopping centers and a cell tower located on one of the properties.

The shopping centers and cell tower generate $250,000 annually in ground lease revenue for the city.

“That number may not sound like a lot, but for a city of our size that will have an impact to our services,” said Community Development Director Abel Avalos.

The Los Jardines Shopping Center, located in the 7000 block of Eastern Avenue in Bell Gardens, is home to dozens of stores that draw thousands of shoppers to the area. (EGP photo by Nancy Martinez)

The Los Jardines Shopping Center, located in the 7000 block of Eastern Avenue in Bell Gardens, is home to dozens of stores that draw thousands of shoppers to the area. (EGP photo by Nancy Martinez)

Wagner told EGP the damage could have been a lot worse; “in the millions” of dollars, he said.

At one point the firehouse, police department parking lot and neighborhood youth center were all on the chopping block. In the end it was determined those properties and two additional city-owned parking lots are for governmental use, exempting them from the sell-off.

“The best case scenario would have been to keep all the properties, but we believe we protected the majority of our assets.”

“I believe Bell Gardens was a model for redevelopment agencies,” Wagner said, calling the loss of funds a “great loss” to cities like Bell Gardens that used its funds as intended, to build much-needed affordable housing and to replace blighted areas with thriving businesses.

Primestor Inc. developed the Bell Gardens shopping centers and will have first dibs on purchasing the ground leases.

Wagner says the city has a good relationship with Primestor and is confident the developer will purchase the property.

Avalos told EGP the city has received a few informal inquiries about an RDA property on the 5000 block of Shull Street, which could be used for either light manufacturing or higher density housing. The remaining properties would be sold for commercial development, he added.

Bell Gardens will get just over 9 percent of the sales revenue, but will continue to receive sales tax and property tax. The money being lost could have gone back to the community, Lam said.

Any ambitious plans the city had for revitalization may no longer happen, cautions Avalos.
There’s no more money for affordable housing, stressed Lam.

According to Wagner, the city will also take a big financial hit on the $30 million it initially invested as seed money for the redevelopment agency back in the 1970s, since it doesn’t appear that the state will reimburse municipalities any time soon for their loans to the agencies. That money is owed to the local taxpayers, he said.

A little over half of the city’s initial investment has been paid back over the years, but there’s still about $14 million owed to the city’s General Fund, according to city Finance Director Will Kaholokula.

The interest they originally agreed to will also not be honored, instead capped at 10 percent.

“The governor said ‘sorry cities, too bad…you’ll get your money last,’” said Lam, explaining it could take 50 years for the state to pay the entire amount back.

Now the city is tasked with bringing in developers to privately fund projects.
According to Wagner, it’s something the city has done before and will do again.

“The loss of tax money developments will not stop Bell Gardens from attracting business to the city.”

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Twitter @nancyreporting

nmartinez@egpnews.com

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