The Mirage of Redevelopment

Nothing Is As Nice As Developing Fontana
Current official slogan

Fontana Headed For Economic Catastrophe
Headline, 1987^[122]

Even as the "Reagan Boom" was taking off in 1983, steel towns were still dying across the country, from Geneva (Utah) to Lackawanna (New York), Fairfield (Alabama) to Youngstown (Ohio). Aliquippa, from which so many Fontanans had emigrated in the 1940s and 1950s, was amongst the hardest hit. The shutdown of the immense, seven-mile-long Jones and Laughlin (LTV) complex, and the layoff of twenty thousand workers, was the equivalent of a nuclear disaster. A third of the population fled; of those left behind, more than half were still jobless four years after the closure. The Salvation Army became the town's leading employer. A 1986 study of three hundred Aliquippa families revealed that 59 per cent had difficulty feeding themselves, 49 per cent were behind in their utility bills, and 61 per cent could not afford to see a doctor.^[123]

Driving through the Valley on Thanksgiving Day 1988, on the way to lay a wreath at the union martyrs' monument in Homestead, I found little improvement or new hope. For miles along the Ohio River the sides of the great mill had been stripped away by demolition crews, exposing the rusting entrails of pipework and machinery. Downtown Aliquippa, tightly wedged in its abrupt valley, was boarded up and as empty as any Western ghost town. At the old main gate, through which ten thousand Aliquip-pans had once daily streamed to work, a forlorn lean-to and some fading picket signs announced "Fort Justice," the site of a futile, two-year vigil by local unionists to save the plant from demolition.

By any standard Fontana should have suffered the same fate as Aliquippa.

Studies in the early and late 1970s confirmed that almost half of the town worked for Kaiser and nearly three-quarters drew paychecks dependent upon the mill.^[124] Yet when the final shutdown came in December 1983, Fontana was a boom-, not a ghosttown. Side by side with the defeated milltown, a new community of middle-class commuters was rapidly taking shape. In the last years of the plant's life the population began to explode: doubling from 35,000 to 70,000 between 1980 and 1987, with predictions of 100,000-150,000 by the year 2000. In an interview with the Times as the last slabs were being rolled out at Kaiser, Fontana's Mayor Simon exulted about the city's new-found prosperity as the housing frontier of Southern California. "Nobody expected what's been happening here. When Kaiser closed, everybody thought the town was going to go kaput, but that hasn't happened."^[125]

The recycling of Fontana had begun in the mid 1970s after a clique of local landowners and city officials, led by City Manager Jack Ratelle, recognized that residential redevelopment was a lucrative alternative to continued dependence upon the waning fortunes of Kaiser Steel and its blue-collar workforce. Unlike Aliquippa they had the dual advantages of being the periphery of a booming regional economy and having access to an extraordinary tool of community restructuring—California's redevelopment law. Created by a liberal legislature in the late 1940s to allow cities to build public housing in blighted areas, the law had become totally perverted by the 1970s. Not only was it being employed for massive "poor removal" in downtown San Francisco and Los Angeles, but "blight" was now so generously interpreted that wealthy cities and industrial enclaves—from Palm Springs to City of Industry—were using the law to build luxury department stores, convention centers, and championship golf courses with "tax increments" withheld from general fund uses.

Fontana's particular riff on these redevelopment strategies was its creation of an open, some would say "golden," door for developers. Ratelle and the other city fathers fretted about their ability to compete with Rancho Cucamonga to the west—a "greenfield" city concocted out of several thinly populated, agricultural townships. In order to eventually become like Orange County, they started out by acting like Puerto Rico. To compensate for gritty Fontana's "image problem," and to give it a comparative advantage in the Inland Empire's landrush, they bent redevelopment law to offer "creative financing" for large-scale developers: tax-increment and tax-exempt bonds, waiver of city fees, massive tax rebates, and, unique to Fontana, direct equity participation by the redevelopment agency. Application and inspection processes were drastically streamlined to accelerate ground-

breaking in the city that aspired to become the "developer's best friend."

Fontana's pioneer redevelopment project was an expensive—many would say unnecessary—facelift of Sierra Avenue begun in 1975. David Wiener, whom the local paper likes to call the "dean of Fontana developers," was given tax-exempt financing and sales-tax rebates to construct four new shopping complexes. A little later the Fontana Redevelopment Agency (FRA) began to uproot vineyards south of Interstate 10 to build the Southwest Industrial Park. But the big Orange County and West L.A.-based developers, already heavily involved in Ontario and Rancho Cucamonga, refused to consider Fontana until it was clear that Kaiser Steel was doomed and that the milltown onus could be removed.

Fontana's first megaproject, initiated in 1981, was the Village of South-ridge, located in the Jurupa Hills redevelopment area south of I-10 and projected for a build-out of nine thousand homes by the year 2000. Creative Communities, the Huntington Beach-based developers of South-ridge, seduced Fontana's civic leaders by giving them a tour of Irvine, the famous master-planned city in southern Orange County. They convinced the starstruck Fontanans that a simulacrum of Irvine could be developed in Fontana's own south end if the city were willing to provide adequate infrastructure and financing. As Mayor Simon later recalled, "the city fathers wanted the project so bad that they could taste it." Accordingly, with visions of Fontana-as-Irvine dancing before their eyes, they signed a far-reaching agreement with Creative Communities that pledged the FRA to reimburse most of the infrastructural costs normally borne by developers.^[126]

In 1982, one year after the groundbreaking in Southridge, Fontana annexed a huge triangle of boulder-strewn fields north of the city, abutting Interstate 15 (then under construction). The completion of I -15 through western San Bernardino and Riverside and northern San Diego counties has created one of the nation's most dynamic growth corridors. (One of the corridor's boomtowns is "Ranch California," a 100,000-acre project originated by Kaiser Development Co. in Temecula.) Three hundred thousand new residents are expected in western San Bernardino County alone.^[127] Fontana, sitting at the strategic intersection of I -15 and I -10 (the San Bernardino Freeway), has superb linkages to this rapidly expanding commutershed. The North Fontana Project Area, which incorporates the old Fontana "ghetto" (an area of ironically exploding land values), is the largest redevelopment project in California (fourteen square miles), encompassing a series of prospective master-planned communities. Largest is the upscale Village of Heritage, directly competitive with Rancho Cucamonga's Terra Vista, and Victoria, which is being developed by BD Part-

ners of West Los Angeles (Richard Barclay and Joseph Dilorio), with heavy equity participation from FRA. Heritage will provide four thousand of the eighteen thousand new homes that the FRA wants to add in North Fontana over the next generation.^[128]

By the time the demolition crews got around to dismantling Big Bess, Fontana's leaders had managed to put 20,000 new homes in the $60,000-and-up range on the drawing boards in Southridge and North Fontana.^[129] Within four years of Kaiser Steel's closure, raw land prices in Fontana had doubled.^[130] This remarkable achievement garnered national accolades and much talk of a paradigmatic "Fontana miracle." The Los Angeles Times , for example, downplayed the impact of the Kaiser shutdown and resulting 15 per cent local unemployment (which it misreported as 9 per cent) in order to emphasize the city's "bright future" under its redevelopment strategy.^[131] Journalists uncritically reproduced city officials' claims that Fontana would soon be wealthy from its soaring tax bases and profits on its equity position in different developments. Just as Kaiser industrial relations had once been studied as a textbook model, now Fontana's resilience was presented as laboratory confirmation of the Reagan Administration's claim that deindustrialization was only a temporary and marginal cost in the transition to postindustrial prosperity based on services, finance, and real estate.

The first symptom that all was really not so well in Fontana redux was the sharp increase in white supremacist agitation and racial violence after the layoffs at the mill. During the course of 1983 the local Ku Klux Klan—about two dozen strong—crawled out from under their rock and began distributing leaflets in the high schools, holding public rallies, and even offering to "assist" the Fontana police. The Klan revival seems to have exercised a certain charisma upon a periphery of skinhead youth. In a savage October 1984 attack, a twenty-year-old Black man, Sazon Davis, was left paralyzed from the chest down after being beaten by three skinheads on Sierra Avenue—Fontana's main street. The Black community was further outraged—shades of O'Day Short—when the San Bernardino County district attorney refused to prosecute the white youths, one of whose mothers was the dispatcher for the Fontana police. (The reaction of Fontana development director Neil Stone to this local precursor of Howard Beach was to moan that "image has been our main problem.")^[132]

Worse problems lay soon ahead. By Christmas 1986 the Fontana bubble had burst. City Finance Director Edwin Leukemeyer resigned in the face of charges that he had embezzled public funds and sold off city-owned vehicles to his friends and relatives. Within six months the stream of res-

ignations and indictments prompted one paper to claim that "police detectives and auditors [are] almost as common a sight in City Hall as file clerks."^[133] Amongst the new casualties—a list that included the city treasurer, the motor pool director, the redevelopment director, and the development director—was City Manager and ex officio FRA chief Jack Ratelle, the chief architect of the "third Fontana." The city council forced Ratelle to resign after published reports of gratuities from leading developers made his position untenable.^[134]

Demoralization in Fontana City Hall was turned into panic in August 1987 by the release of an independent audit of the city by the regional office of Arthur Young. The Young report was devastating: the FRA was in a "chaotic state of disarray" and the city was on the edge of bankruptcy.^[135] The Young analysts discovered that the FRA had pawned Fontana's future in order to seduce developers. With 60 per cent of its tax base located in redevelopment areas, and obligated as payments or rebates to developers, the city could not afford to meet the needs of its expanding population. No tax revenue was left over to pay for the additional load that the new suburban population placed on its schools or public services.

Southridge alone, which Ratelle had always portrayed as a municipal gold mine, threatened to drive the city into bankruptcy as the FRA faced $10,000 per day in new interest charges accumulating on the unreimbursed principal which it owed Creative Communities. Official estimates of the total tax revenue that will be absorbed in debt service to Southridge run as high as $750 million by 2026 when the agreement expires.^[136] It is unlikely that the principal will ever be repaid. Like a miniature Mexico or Bolivia, Fontana is a debtor nation held in thrall to its Orange County and West L.A. creditor-developers. With its suburban property tax streams diverted to debt service, the city has had to impose both austerity (in the form of overcrowded schools and degraded services) and (as in Southridge) special fee assessments on unhappy new arrivals. The alternative of raising additional city income from existing commerce is excluded by the FRA's profligate rebates of sales taxes and municipal fees to the owners of the new shopping centers.

The release of the Young report (which also included sensationalist details of financial mismanagement and the destruction of records in City Hall) emboldened local journalists to muckrake through the FRA's records, untangling the circumstances of the agency's incredible profligacy. Mark Gutglueck of the Herald-News eventually exposed in detail how various redevelopment schemes had pauperized the city.^[137] The older mom-and-dad businesses along Sierra Avenue, for instance, were starved of

redevelopment funds by FRA policies that favored chain-store "K-Martization." Thus the FRA, in a typical example, gave tax-exempt financing and a $750,000 tax rebate to induce National Lumber to move into one of David Weiner's new shopping centers, itself financed by tax givebacks. The net result for the city was a large tax deficit and the closure of Ole's Hardware, an oldtime Fontana institution.^[138]

Likewise, in the case of Southridge, Gutglueck revealed how City Manager Ratelle and redevelopment lawyer Timothy Sabo (accused in the Young report of raking off excessive fees) overrode the strong objections of the city attorney to provide Creative Communities (later Ten-Ninety Ltd.) with whatever they demanded: hiked-up interest rates on FRA's obligation, forgiveness for their failure to build schools on time per contract, and so on. Moreover, the developers were repeatedly allowed to modify the community's specific plan, successively reducing the quality of housing and local amenities. The developers, in turn, pampered officials (like planning chief Nell Stone) with "finders fees," gratuities, and the use of a lakeside resort, while Southridge—which Mayor Simon liked to call "the Beverly Hills of Fontana"—evolved into misery.^[139] One planner who worked there has described it as "rabbit hutches with two-car garages, without adequate schools or public services."^[140] Not surprisingly the Young report and the Gutglueck revelations fueled a revolt by embittered Southridge residents who demanded a moratorium on further growth, the recall of the council majority, and a system of district elections.^[141]

Given the enormity of Fontana's suddenly exposed problems—the venality of its officials, its Andean-sized debt and the lien on its tax base until the next millennium, its underfunding of essential services, a growing mismatch between housing and jobs, and so on—the voter revolt was strangely muffled. Closure of Kaiser had dispersed much of the political base once organized by Local 2869, while the new commuter citizens had little time or focus for civic engagement. As a result the growth coalition—minus a few leaders in jail or exile—handily dispersed its challengers.^[142] The Southridge-instigated recall campaign was easily defeated, while the demand for a growth moratorium was harmlessly converted into a 45-day temporary freeze on building permits. The council did scale back a few development plans in North Fontana and gave lip service to the Young report's two hundred recommendations. But the most symptomatic reaction to the crisis came from Mayor Simon (then under investigation for making unlawful personal investments in one of the redevelopment areas), who simply urged Fontanans "to just keep smiling."^[143]

Since then the city fathers have tried to escape bankruptcy by tacking

their sails to various, sometimes countervailing, winds. Like the rubes they are, they have ended up buying back into schemes virtually identical to those that Bolivianized Fontana in the early 1980s.

First, they have searched high and low for some commercial deus ex machina to generate a compensatory tax flow for their fiscal deficit. Mayor Simon's own pet-rock scheme—contrived during a Canadian vacation from his legal problems—was to induce a multi-billion-dollar investor to build the California version of the Edmonton supermall in Fontana.^[144] In the absence of responses from Donald Trump or the Sultan of Brunei, the city teamed up instead with Alexander Haagen, Southern California's major mall builder, in a scheme to build a combination mall-entertainment complex in South Fontana. Just like Southridge, Haagen's Fontana Empire Center (scheduled for completion in 1995) was sold to local officials in a blaze of Orange County imagery: "Fontana's answer to the South Coast Plaza." Lest any of the Fontanans stop to ponder the absurdity of a Sears-anchored mall competing with the nation's wealthiest regional center anchored by Gucci and Neiman-Marcus, Haagen anesthetized opposition by generously donating to all ten candidates wing for the two vacant seats on the council.^[145] (Recently Haagen has started to backtrack on his original promises, proposing to develop one-half of the mall site for luxury homes instead of commerce.)^[146]

Meanwhile, Fontana leaders have tried to scrub the city clean of its blue-collar, "felony flats" image by drastically limiting the development of apartments and low-income units.^[147] The revised Fontana masterplan even de-emphasizes "starter homes"—the meat and potatoes of the previous plan—to favor more expensive "move-up" or second homes.^[148] Salesmen of Fontana's "new look," however, were immediately embarrassed by a recrudescence of the old Fontana in 1988. Millions of television viewers nationwide watched as celebrants of Martin Luther King's birthday had to be escorted down Sierra Avenue by a hundred and twenty police as acrid little knots of Fontana Klansmen shouted, "Long live the Klan. Long live the white boys." Subsequent "Death to the Klan" counter-rallies by the Jewish Defense League contributed yet more unwanted notoriety.^[149]

The campaign for an upscaled Fontana also collided with plans for a reindustrialized Fontana. With an unerring sense for courting contradiction, as one group of Fontana planners was trying to increase residential exclusivity, another was simultaneously kicking out the jambs for breakneck factory and warehouse construction. Offering contractors the state's fastest track for industrial development, they guarantee building starts six days after application, rather than the nine months normal elsewhere.^[150]

As angry homeowners have pointed out, combining poorly monitored industrial development—much of it highly toxic—with dense residential development is like mixing oil with water. This point was vividly illustrated in 1988 when more than 1,500 Southridge residents had to be evacuated after a nearby chemical spill.^[151]

The final irony, however, is Fontana's ardent courtship of Kaiser Steel's residuum: Kaiser Resources. Left with a mile-long slag mountain and seven hundred acres of polluted wasteland, KR in partnership with Lusk-Ontario Industries has maneuvered brilliantly to get Fontana to foot the bill for the clean-up. By coyly flirting with Ontario and Rancho Cucamonga, then suddenly throwing kisses to advocates of independent cityhood for Fontana's unincorporated westside ("Rancho Vista"), KR drove Fontana officials into a jealous frenzy. As a result, debt-hobbled Fontana is offering a memorandum of understanding to KR and Lusk that would guarantee $190 million in public funds to renovate the ex-Kaiser Steel site. In particular Fontana would help clean up the still spreading plume of soil and groundwater contamination that is the legacy of forty years of steelmaking, and which has replaced the smoke-cloud from Kaiser's coke ovens as the symbol of environmental distress in San Bernardino County. KR and Lusk, in turn, would accept annexation by Fontana and agree to develop a high-tech industrial park. But a centerpiece of KR's plan is a perverse environmental joke: importing Silicon Valley's toxic waste for processing in Kaiser Steel's still extant treatment facility.^[152]