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Show Bureaucratic Accountability: A Look at Utah's Redevelopment Agencies Adam Caldwell gested explanations for this. First, it is considered "protocol" that in-depth audits not be done more than once every 10 years (Stephenson 1998; Taylor 1998). Ten years soon will come to an end since the last audit and it would not be a surprise if one saw another audit in the next few years. The second explanation comes from the auditors themselves. A few in the Salt Lake County Auditor's office have expressed their displeasure with the lack of response received from the State Legislature from their first series of audits. One auditor felt as if he was simply banging his head against a brick wall. With all of the grief the auditors received from the redevelopment agencies they were auditing and the lack of interest from the Legislature, many of the auditors have come to the opinion, "why bother?" The first of two Salt Lake County audits is now examined here. For a county audit, this report drew considerable attention. The report also drew considerable criticism from the redevelopment agencies (SLCA 1991). The first major issue raised came in the area of tax increment financing. The audit found that the agencies have significantly deviated from the original intention of the Legislature. This deviation occurred when redevelopment agencies began including adjacent areas into their project in which no redevelopment was occurring. These areas were brought into the projects for no other purpose than to capture their tax base. Redevelopment plans contain several instances of drawing lines arbitrarily to include high-income businesses into the redevelopment area. Such drawings of lines actually led to a lawsuit between Sandy and Salt Lake County. Salt Lake County accused Sandy of taking the attitude that "if anything taxable grows out here, we get it" (SLCA 1989, 37). Sandy had interpreted the term "blight" to include vacant lots and farmlands. The lawsuit was dropped later when the Legislature limited redevelopment areas to 100 acres or less. Such behavior in Sandy prompted the Legislature to put limits on redevelopment areas, especially as to tax increment financing (39). It was the auditor's opinion that the taxpayers' interests are not adequately protected when a redevelopment agency takes tax increment financing. This happens because the redevelopment agencies do not need to justify their use of these funds against the alternative uses by other taxing entities or the taxpayers. Other agencies do so during the legislative process in which they must lobby the Legislature for funding. Redevelopment agencies do not go through such a process. The next serious question that the audit raised was whether specific development would have occurred without the help of the redevelopment agency. In the opinion of the report, in many cases the redevelopment agencies did not actually create development, but merely determined the location. A common example is in the construction of a store such as a Wal-Mart. Wal-Mart often will use two neighboring cities' redevelopment agencies to bid against one another to offer the best deal to the new Wal-Mart. In this situation Wal-Mart decides whether to build the new store in town A or town B. When Wal-Mart executives determine a prime area for a new store, the only question that remains is which city will offer the most incentives. Such examples of cities assisting Wal-Mart in their own economic growth are so common that in California this practice is labeled as "Wal-Mart redevelopment" (Turpin 1998). If this result is merely relocation of development, this would lead to a net loss for the taxpayer because funds that otherwise would have gone into the public schools or other programs were used to create projects that would have taken place anyway. Other sources of taxing must be found to make up for this loss. Another description of this is "corporate welfare." Although a net decrease in blight may have occurred, it is an actual economic loss for the state. The aesthetic cost of blight versus the economic value of tax dollars would then have to be weighed. The audit says that if one accepts the assertion that redevelopment agencies simply relocate development, the actual loss from redevelopment creations from 1987 to present could be as high as $67 million in Salt Lake County alone, most of which would have gone to the public school districts. The audit suggests that "it is at least questionable whether the present decision making process represents the best interests of all taxpayers" (SLCA 1989, 75). The two years that followed this report showed a tremendous growth in the number of redevelopment agencies. One might initially think that such a damaging report would cause cities to think twice about starting a redevelopment agency. But it also could be argued that cities realized how lax the laws were and that while the state as a whole might suffer economically, individual cities have quite a lot to gain. In two years, 14 new redevelopment agencies started up in Utah. With such a growth in the number and activity of redevelopment agencies, the Salt Lake County Auditor's office decided to update the original report. This second report (1991) did not indicate any improvement in the way Salt Lake County's redevelopment agencies were conducting business. One of the major criticisms was that older redevelopment agencies, as well as several of the new agencies, continued to use tax increment financing to fund redevelopment projects that took place on farmlands and vacant properties. The problem, the report pointed out, was that many of these projects were taking place on prime locations, where development was going to occur anyway on its own. A second major criticism came in the obeying of the 100-acre limit that the Legislature had recently adopted. Cities found an answer in simply taking a larger redevelopment area and creating two separate redevelopment projects that took place concurrently. One example took place in West Valley, where two side-by-side projects totaled over 177 acres. The audit saw this project as a blatant attempt to ignore the law, concluding "that the creation of the two projects is little more than a legal fiction that dodges the 100 acre limit" (SLCA 1991, 18). Although the two projects did have two separate 34 |