Tuesday, May 08, 2007

Racism and the City Development Corp.

That's it, we've got to start attending city council meetings more regularly, if only to avoid hearing this news a week later.

A dispute on the City Council over a multimillion-dollar Northwest development project exploded last week with accusations of racism when a prominent African-American developer was not awarded exclusive negotiating rights.

The regular City Council meeting went into meltdown after nearly three hours of debate on whether to enter into sole negotiations with the Bakewell Company and its partner Century Housing for the contract to build Heritage Square, a residential and commercial complex on 2.82 acres at the northeast corner of Fair Oaks Avenue and Orange Grove Boulevard.

The city paid about $9 million for the property, which staff now estimates is worth about $11 million.


Wait a sec? The city paid $9 million for this property? Why is the city involved? Last time I checked, commercial and residential development was a task that private developers were perfectly capable of handling. You want to build a new development? Buy the property, hire contractors/developers whatever you need, and then try to sell your new office space or condos. There's no reason for the city to be involved.

Unless, of course, the city is steering tax dollars back into the city through this "redevelopment," precluding those dollars from going through the Sacramento washing machine. I'd have no problem with that except it creates situations like this one: suddenly the city council is deciding what private developer gets to build on the property. What happens if the city picks the wrong developer and costs balloon? Who picks up the tab? Well, as history demonstrates, the taxpayers of Pasadena:

Mayor Bill Bogaard, along with City Councilmen Steve Madison, Sid Tyler and Steve Haderlein, said they weren't ready to award the contract exclusively because of concerns arising after an independent financial analysis by Keyser Marston Associates said Bakewell underestimated the project's cost and left a $5.12 million funding gap.

Some of their misgivings are fueled by Bakewell's development of Renaissance Plaza across the street, which required a significant municipal subsidy.


Let's not dress it up: "a significant municipal subsidy" is dollars out of the pockets of Pasadenans, to pay for a development that we had no say in. The incentive structure is all wrong here: when you're the owner of a development, you have a lot of self-interest to make sure that you pick the right person from an economic viewpoint. When you're a city councilman, you have lots of other competing incentives: perhaps one developer is a big campaign donor, or, as it's been alleged here, the council has a "preferred" developer.

The allegations of racism here, particularly given that they seem rather out of the blue, are secondary to a much bigger problem; namely, the city performing a function it shouldn't. I think we can all agree that "municipal subsidies" for developers is nothing more than a handout for business. Free market fanatics and anti-capitalists can both agree that's a bad thing.

9 comments:

Miss Havisham said...

I am still kicking myself for leaving early that night.

Watching it on tape made me cringe and I've been in a city council funk ever since. Thanks for slapping me out of it!

Anonymous said...

Azusa should learn a lesson from this. The city is buying up all the downtown north properties, basically hoping and crossing their fingers they can persuade developer like Target to build. If not, they are gonna be stuck with alot of land!

Boris Yeltsin said...

Glad the government can decide which people would be better suited to utilize land and redevelop old property. I never knew the Pasadena Politburo engaged Marxist economic controls under the guise of "redevelopment" efforts. It seems like a common practice in FC that should be stopped. The question then becomes how can't our FC governments intrude on our freedoms?

jane said...

Bakewell always plays the race card...while the City should be playing the "you mismanage all your funds" card.
He thinks he race superceeds his ability to manage a project well - the last project he managed went over budget and the City stepped in - he will go over budget again if given the chance. He's crooked and his business model is a disaster.

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