In Rush to Redevelop, a California City Tramples Property Rights

Nearly 17 years ago, I penned a feature column for The Orange County Register about Santa Ana, Calif.’s “Renaissance Plan,” which was a city idea to drive out nearly 130-plus commercial and industrial businesses and replace them with a high-rise transit-oriented district featuring condos and apartments. The plan also called for revamping downtown. It was typical of the kind of projects that “urbanists” were pushing nationwide.

I’m all for high rises, housing construction and downtown improvements—but not in a manner that obliterates people’s property rights in the process. As I wrote, “I’d call it the ‘Forced Gentrification Plan’ or ‘Send Good-Paying Industrial Jobs to Rialto Plan,’ or as one person said sardonically, ‘Remove the Poor Mexicans from Downtown Santa Ana Plan.’” I encouraged the public to express outrage.

After a fracas ensued, and state Sen. (now congressman) Lou Correa (D–Calif.) intervened, Santa Ana officials compromised with an “overlay zone” that allowed these businesses to continue operating, even as developers built housing projects around them. A fair solution, it echoed neighboring Anaheim’s up-zoning of the light-industrial Platinum Triangle. I hate this term, but this was a “win-win.”

Time goes on and now Santa Ana is governed by officials who embrace the latest planning trends. The city unveiled its Renaissance Plan at the beginning of a subprime-mortgage crisis and bursting housing bubble. Since then, housing prices have soared and the entire state is struggling with housing shortages. Hence, lawmakers passed myriad laws encouraging and subsidizing multi-family housing construction. The state has also pressured cities (including Santa Ana) that fall short of state-mandated housing goals.

Meanwhile in 2017, then-Gov. Jerry Brown signed Senate Bill 1000, which promotes “environmental justice” by, as the attorney general’s office explains, “requiring local governments to identify environmental justice communities … in their jurisdictions and address environmental justice in their general plans.” Basically, cities must mitigate pollution in poorer neighborhoods.

Now Santa Ana is back with a plan that echoes the Renaissance Plan. The rationales have changed, but the policies remain the same. With little outreach to business owners, City Council this year approved a moratorium on the approval, expansion or modification of any industrial uses in the SD-84 Transit Zone. And the city is working to permanently rezone the area. Watch out as similar ideas mat be coming to a city near you.

I’ve talked to business owners in the area, who have had minor ministerial permits and business changes rejected by city officials because of the moratorium. Even if the city lets them operate for the foreseeable future, a permanent zone change will destroy the improved value of the land. (By the way, residents in the “protected” Logan and Lacy neighborhoods fear the moratorium will drive up rental prices.)

These businesses invested heavily in the properties since 2007, including construction of new buildings. If they can’t sell for ongoing industrial uses, any sale price will be reduced to the price of raw land. According to owners I interviewed, this means drops in value of 25 percent to 75 percent. And the city is making it tough for them to keep operating as is.

In an August letter, an attorney for Adams Iron Co. argued the city is holding up permit approvals even though the ordinance “does not authorize the city to put on hold permits for existing industrial uses.” Santa Ana is taking a “draconian position” that extinguishes the company’s vested rights —in violation of constitutional prohibitions on “‘taking’ or ‘damaging’ of private property without payment of just compensation.”

Owner Bob Adams, who I featured in a photograph accompanying that old column, told me the previous overlay zone was “a promise by the city (to allow) all industrial businesses to remain and operate in perpetuity. Now after 48 years of investing, creating jobs and building a future for myself, my family and our employees, we are threatened to be eliminated by the city’s actions.” I certainly understand why he is “mad as hell.”

Nearby residents have complained about noise and nuisance issues, but those concerns can be mitigated without shuttering businesses. Most properties are tidy commercial structures, many with attractive newer buildings. This isn’t the Rust Belt. These businesses provide hundreds of jobs and bolster the tax base.

In its “historic” moratorium, the city references SB 1000. The environmental-justice concept is bizarre in this instance. Generally that term refers to—and often legitimately—harm imposed on poorer neighborhoods as polluting industries encroach. But these businesses have been here for decades. The city is encroaching on them by encouraging new housing. It reminds me of when residents complain about cows and tractors after they move into a new subdivision built on a farm field.

The city is finally meeting with the owners, but it needs to come up with a plan that respects these businesses’ property rights. In the urbanist world that city planners envision, there’s no reason residents and businesses can’t coexist. This is also a reminder that nice-sounding and well-intentioned “justice” legislation can lead to far-reaching injustices once local officials gain new powers.

This column first appeared in The Orange County Register.

The post In Rush to Redevelop, a California City Tramples Property Rights appeared first on Reason.com.