October 30, 2007

Sales tax vs property tax "incentives"

Well sales tax or property tax LAAG really does not like seeing tax dollars used as incentives for mega-wealthy private corporations. If all cities were barred from this practice by state law then there would be an even playing field. In any event since this practice is going on and no one seems willing to stop it, LAAG suggests that some tax money "incentives" be used on the South and Bellflower shopping center.

Dave Wielenga
October 22, 2007

Every time Long Beach offers to rebate sales tax to mega-retailers in an attempt to lure their business to town, some reporter is sure to call Lakewood City Hall for comment. That’s what I do, anyway. Lakewood kinda likes to righteously remind the world that it doesn’t stoop to such self-cheapening tactics.

“Lakewood has never given away sales-tax revenue to induce businesses to come here or to keep them here,” the city’s longtime spokesman D.J. Waldie told me in June–a few days after the Long Beach City Council voted to kick back nearly $1 million in sales tax to Best Buy in hopes of luring the electronics store to the Marina Pacifica Mall.

But it turns out that the Lakewood Redevelopment Agency has found other ways to pay the Macerich Company — the gigantic shopping center development conglomerate that owns the Lakewood Center Mall — approximately $7.9 million during the past seven years. The money has been laid out in a couple of multi-million-dollar lump sums and a curious long-term arrangement to lease parking spaces.

The rationale for the payments — authorized on September 14, 1999 — was to entice Macerich to expand the Lakewood Center Mall, which is the city’s biggest economic engine and provides the bulk of the sales-tax revenue that Lakewood uses to supply services to its residents.

Who are the members of the Lakewood Redevelopment Agency? The very same people who compose the Lakewood City Council–many of whom often receive campaign contributions from Macerich.

Their plan to put money in Macerich’s pockets has two parts:

The first consisted of a pair of $2 million payments to Macerich–one delivered when building permits were issued for the mall’s expansion and the other when the mall’s wing actually opened in 2000.

The second was a 15-year contract that commits the Lakewood Redevelopment Agency to pay Macerich between $450,000 and $750,000 per year to “lease” 1,900 parking spaces at the mall. Since 2002, those lease payments have totalled some $3.9 million. That’s an average of $650,000 per year, although for the past three years — including the most-recent payment in mid September–the outlay has been the maximum $750,000. That translates to $390 per space.

Waldie didn’t flinch when we called him for comment this time, either.

“Our policy is against using sales-tax rebates to attract retailers to a development site,” he specifies. “But this situation is a redevelopment agency spending property tax increment revenue — an increase in property tax revenue within the redevelopment district — which can only be spent within that district. It doesn’t take away money from the general fund.”

But it does make it nice to be Macerich.

Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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