Redevelopment Laws Bent : Indian Wells vs. the Poor: Lack of Room or of Will?

This is a town of sagebrush and rich people. It is a town of walled and gated neighborhoods, sprawling resorts and high-priced restaurants. It is a town where there is nearly an acre of verdant golf course for each man, woman and child.

So officials here were caught off guard when a bitter controversy erupted over one of the few things lacking in this sunbaked oasis: the poor.

The controversy surrounding tiny Indian Wells, population about 2,000, is the tale of a wealthy community that bent state redevelopment laws intended to help aging cities battle slums and blight so that it could spend taxpayer money to attract upscale businesses and resorts. Having done that, it is now reluctant to make room, as the law requires, for the hundreds of low-skilled and low-paid workers needed to keep those businesses going.

Civic and business leaders in the surrounding desert playgrounds of Palm Springs, Rancho Mirage and Palm Desert--none of which are exactly havens for the disadvantaged--have accused Indian Wells of trying to “sweep the less fortunate into areas out-of-sight and out-of-town.”

At times it sounds like the debate over South Africa with all the talk of a “separatist” policy that critics maintain is intended to keep the town a “ghetto for the rich.”

At the center of the dispute is the city’s efforts to avoid building hundreds of low- and moderate-income dwellings within its boundaries.

Faced with state regulations that require their construction, officials have gone to Sacramento to push for legislation that would allow the bulk of the dwellings to be built somewhere else. The bill, propelled by a high-spending campaign launched by the developers of a proposed luxury resort, breezed through the Senate and is awaiting a vote on the Assembly floor.

‘It’s Just the Jealousy’

It’s not because the city doesn’t want the poor, Mayor Richard Oliphant insisted. It’s just that with all the resorts and fancy restaurants, there’s simply no more room. So the offer to build the low-cost housing outside city limits ought to be applauded, the mayor said, not derided.

“It’s like getting up on stage and announcing that you want to do some good and everyone throws rocks and tomatoes at you,” said Oliphant, who has lived in Indian Wells for 16 years. “I understand, though. It’s just the jealousy of the communities around us that would like very much to be able to do the same thing.”

“Hogwash,” countered Buford Crites, councilman from neighboring Palm Desert. “I think it is an obligation of the city (to provide housing). . . . It’s certainly not an obligation for them to take the profit (from commercial development) and then stuff the poor down the road. If what they are doing is so wonderful, I hope to hell they never give me a Christmas present.”

Tourist Trade

Indian Wells’ problem is one that plagues much of the Coachella Valley, where an obsession with bolstering the tourist trade has distracted the attention of elected officials and relegated the needs of low-paid workers to the back burner. Nonetheless, these same cities have risen in protest, fearing that Indian Wells’ apparent success in ducking the affordable housing question could leave them at a disadvantage.

“Any time you are able to export nonprofit-makers like low- and moderate-income housing from your city, you are better off,” Palm Springs City Manager Norman King acknowledged. “There are high economic stakes involved.”

The controversy can be traced to a time when Palm Springs was the desert’s premier winter destination and Indian Wells served as its bedroom--a place for the truly affluent to escape the inevitable commercialization.

Brink of Bankruptcy

All that changed in the early 1970s, however, when Indian Wells suddenly awoke to the realization that its strong resistance to commercial development had robbed its treasury of its tax base and left the town, populated by some of California’s wealthiest citizens, on the brink of bankruptcy.

“We brought in financial consultants and they were able to predict when our city would be bankrupt,” Oliphant said. “What we did then was try to decide what to do and that was to go for premium destination hotels.”

The way to do that, officials reasoned, was through redevelopment. Under the program, blighted cities are allowed to use property taxes generated by new development to pay for streets, sewers and other amenities or to directly subsidize private investment.

Designated as Blighted

In the case of Indian Wells, there was no blight, just acres of pristine desert and costly subdivisions tucked away behind guarded gates. But to City Council members, the prospect of running out of money was enough. They adopted the necessary declaration: virtually the entire town was designated as blighted.

The redevelopment money that flowed in was spent for, among other things, construction of a public golf resort consisting of two championship courses designed to attract world-class hotels.

Initially, there was a public uproar. The Legislature, citing this and other reported abuses, moved to tighten redevelopment law. But the Indian Wells plan was allowed to continue and it paid off in a big way.

Today, city government is well out of the red. The city boasts the state’s highest per capita income. The cost of older homes averages more than $300,000 and land developers are asking, and getting, more than $1 million for residential lots in new subdivisions.

One Catch

There are two new major hotels, including the ultra-luxurious Grand Champions Resort, and a third is on the way. Most conspicuous are the 1,700 acres of golf fairways, mainly in private country clubs that charge membership fees as high as $90,000.

There was just one catch: State redevelopment law requires that 20% of the property taxes generated by new development be used to build low- and moderate-income housing within the city. Yet not a penny has been spent and officials argue that with all the recent and proposed resort development, there will be no room left to build the housing.

“We’re out of acreage, we don’t have the land,” Oliphant said.

Some critics say the problem is not lack of land but lack of will. “They have a reputation in this valley of being very opposed to the building of low- and moderate-income housing,” Palm Desert’s Crites said. Contending that the city should have built the housing before committing all its land for resorts, Crites added: “If they didn’t want to do that, they shouldn’t have used redevelopment” money.

Controversy Erupted

All of this might have been swept under the rug if not for the controversy that erupted when the private Sunrise Co. announced a plan to build a 4,500-room resort on one of the city’s last large vacant parcels. The brainchild of William Bone, a wealthy Southern California developer, the proposed $1-billion Sunterra project includes five luxury hotels, two 18-hole golf courses and California’s largest convention center, but still no affordable housing.

Ultimately, the project was forced to defend itself against well-financed attacks from competing desert-area hotels and from a voter-sponsored initiative on last November’s ballot. To help at the ballot box, promises were made that the resort would not necessitate bringing low-cost housing to Indian Wells.

Lawsuit Filed

The Western Center on Law and Poverty and the California Rural Legal Assistance Foundation, concerned that the city was attempting to push the poor out, filed a lawsuit. They contended that city government was subverting redevelopment law by refusing to house the hundreds of workers who already staffed its luxury hotels and the estimated 5,200 more that would be required by Sunterra.

“We were faced with a city that had not done anything for low-income housing and was very unlikely to do anything because they simply don’t want low-income housing in that exclusive community,” said attorney Jonathan Lehrer-Graiwer of the Los Angeles-based Western Center. “The fault here was that redevelopment law was being subverted and they were getting money from it (for housing) but not doing anything within the city.”

The suit left Sunrise Co. and city officials in a bind: On one hand, there were the campaign promises not to build low-cost housing in the city. On the other, there was the strong likelihood that Indian Wells would lose the lawsuit.

Negotiations followed. The result was an unusual out-of-court settlement that requires the low-income housing to be built--but mostly outside Indian Wells.

Affordable Housing

Specifically, Indian Wells would be required to construct 148 low- and moderate-income rentals within city limits to meet its affordable housing requirement for earlier redevelopment projects. For the Sunterra project, 750 units would be built within 8 miles, or a 30-minute drive, of the city and an additional 600 units would be built outside city limits but within its “sphere of influence” to satisfy future housing needs.

Since state law requires communities that spend redevelopment money on housing to do so within the project areas only, the agreement cannot be enforced unless the Legislature acts.

Western Center’s Lehrer-Graiwer defended the settlement as the best that could be expected under the circumstances, but admitted to feeling queasy about the center’s role in helping a wealthy community export its poor.

“The reality was that the likelihood of us getting a significant amount of low-income housing built in this city was not great,” Lehrer-Graiwer said. “They would have fought us all the way.”

Appeals would have taken at least 10 years, he added, making it all but certain that no land would be left on which to build the dwellings.

Many wealthy residents of Indian Wells who oppose the settlement still do not want the poor in their town. But they hope that the protests will drive the massive Sunterra project away.

“What they are doing is killing the goose that laid the golden egg,” former Indian Wells Mayor Frank Chilson, who pioneered the city’s redevelopment efforts, said of the current city government. Chilson, who spends the summer months in Maui and says he owns a Rolls-Royce, a Porsche, a Jensen Interceptor and several other exotic cars, added: “This is a place for affluent people who want it quiet and want to be left alone.”

Other critics of the city government contend that the legal settlement and the companion legislation will encourage the creation of two separate cities--Indian Wells for the rich and a backwater community of low-income housing for the poor.

“It’s apartheid if you really analyze it,” said Pat Green, a resident and leading opponent of the city’s efforts. “You’re saying we need these people to work for us and help us make money but, damn it, we don’t want to be associated with them.”

Despite the unified opposition of surrounding cities and several citizen groups, the bill, introduced by Sen. Robert Presley (D-Riverside), has virtually sailed through the Legislature. Some critics suggest that is because of the $400,000-plus that Sunrise contributed during the last year to campaigns of most of the Legislature’s 120 members.

But the bill’s backers also scored points with state lawmakers by citing the support of two of the state’s best-known public interest law firms as proof the bill will benefit the poor.

Growing Concern

There is growing concern that if Indian Wells succeeds in exporting its poor, other wealthy cities might follow.

“Our main concern is that the bill would be setting a precedent so the same kind of thing can happen elsewhere,” said Rev. William J. Wood, executive director of the California Catholic Conference, based in Sacramento.

Wood said he fears what is happening in Indian Wells may reflect a chilling societal trend. “The city is following the general tendency of society, which is to cater to the wealthy and try to shove the social problems off into the fringes,” he said. “That way they can have (communities) that are separate but equal.”