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# Downtown Development: Halt the Subsidies, Spread the Action
May 06 2011
Written by Paul Hatfield.
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**PERSPECTIVE -** Why do we still need tax subsidies to attract new downtown development?
David Zahniser of The Los Angeles Times raised the question. [According to his article](http://www.latimes.com/news/local/la-me-la-tax-breaks-20110504,0,6857077.story), three projects alone will divert $640 million from the city to the developers over thirty years. That’s an average of $21 million per year.
Peter Zen of the Bonaventure Hotel was quoted as saying “blight has been eliminated along downtown’s Figueroa corridor.”
He gets it – why do we need more subsidies?
Downtown has been saturated with glitzy development. It should not require subsidies to attract a project. Any company should be happy to invest in an established thriving zone without taxpayer-funded inducements. Perhaps an unsubsidized project may not be as shiny and grand as one that is.
Big deal – we don’t have to emulate Las Vegas.
Perhaps it is time we charge developers a premium to get a piece of the downtown action.
By contrast, other areas are in desperate need of reconstruction – not necessarily redevelopment.
Subsidies could be offered to attract business to existing corridors that suffer from blight. Take, for example, [Valley Plaza in the East Valley](http://www.dailynews.com/news/ci_17869257?source=rss). There is no need for a mega-mall, as was the original concept. Instead, replacement or renovation of abandoned stores and street improvements are needed. The NoHo Arts District should be the model. Other corridors and zones throughout the city need similar assistance..
The scale for such projects would be much smaller than anything envisioned for downtown; therefore, the subsidies would be much lower. The end result would be thriving local retail centers and better quality of life, for a wider area and for a fraction of the cost.
Unfortunately, the ties between City Hall and billionaire developers are too strong. So strong that other alternatives that could stimulate outlying neighborhoods are crowded out of consideration.
You would think City Controller Greuel would insist on a competitive capital budgeting process where the benefits of subsidies can deliver more bang for the bucks. Why throw money where it is not needed?
This is another example of her ignoring issues related to long-term structural revenue and costs.
*(Paul Hatfield is a CPA and serves as Treasurer for the Neighborhood Council Valley Village. He blogs at Village to Village and can be reached at: ) -cw*
**CityWatch
Vol 9 Issue 36
Pub: May 6, 2011**
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