Scandal Dampens Sacramento’s World-Class Designs
Steven Greenhut
by

Sacramento

I have a simple observation after years of writing about local-development issues: Whenever civic boosters talk about creating a “world-class city,” their city is by definition not one now. The more eager city officials are to use the “world-class” term, the more certain you can be they are governing second-rate places.

Few politicians have used such terminology as much as Sacramento’s outgoing Mayor Kevin Johnson, who was about to be celebrated as something akin to the capital’s savior when he abruptly declined to seek a third term. “It should have been a high point in a career of high points,” reported The New York Times last October, referring to a planned ESPN documentary about how Johnson “helped rejuvenate this once-ailing capital city.”

If Newsweek can proclaim Gov. Jerry Brown the “savior” of a decidedly unsaved California, as it did recently, why can’t a sports network highlight how a former NBA star saved a second-tier capital city by subsidizing a new arena that kept its basketball team from heading to Seattle? Unfortunately for Johnson, old allegations of sexual abuse reappeared because of a news story. The documentary was shelved. He decided not to run for a third term, although he denied the allegations and denied the scandal had anything to do with his exit from public life.

These weren’t the first allegations Johnson faced. “Johnson, who was first elected as the mayor of his hometown in 2008, faced similar allegations from five students at his St. HOPE Academy in Sacramento, though charges were never filed,” according to the New York Post. Johnson denies those allegations, as well as a sexual-harassment claim filed by a city worker last year (her financial claim was rejected by the City Council). Johnson blames his political enemies, including teachers’ unions he believes are angry for his (laudable) efforts to turn a high school into the St. HOPE charter.

There are other questions about St. HOPE, however. In 2007, then-President George W. Bush had appointed Gerald Walpin as an inspector general for the federal agency that oversees AmeriCorps, which dispenses grants for “public service” purposes. As the Wall Street Journal reported in 2009, Walpin’s “office recommended that Mr. Johnson and St. HOPE itself be ‘suspended’ from receiving federal funds” after an $850,000 grant allegedly had been used in inappropriate ways.

Sacramento faced a loss of stimulus funds because of the suspension. The U.S. attorney declined to pursue criminal charges and produced a settlement that cleared Johnson and let the city receive its federal funds. In a 2013 piece for National Review, Walpin wrote that he “received pressure to drop the case against Mr. Johnson” and when he “declined to repudiate my staff’s work, the guillotine fell.” Walpin said he got a call from a White House telling him to resign within an hour or be fired. Johnson, by the way, has boasted about his closeness with the president.

Of course, political scandal plagues cities large and small, world class and otherwise. But it was interesting what little impact it had locally. “If this was proven true or there was an indictment, this might be different story,” Johnson’s political adviser told the Times, referring to the abuse allegation. “This is Sacramento. We have drunk legislators being arrested all the time. People are like, ‘Whatever.’”

The leading candidate to replace Johnson is former Senate Majority Leader Darrell Steinberg. Although Steinberg is by all accounts an ethical man, he ran the Senate when three of his fellow Democratic members were indicted on corruption-related charges. Some observers have criticized Steinberg for only suspending (not expelling) the troubled senators, but that has yet to register as a serious mayoral campaign issue.

My office is two blocks from the new Golden 1 Center that will be home to the Sacramento Kings, who now play in an aging suburban arena. As much as $255 million of the center’s $534 million price tag will be picked up by the taxpayers. But frankly, Sacramento wasn’t a world-class city before the new downtown arena was conceived and it won’t be one after it’s finished. If anything, the project epitomizes what’s wrong with this city and state.

California businesses have long complained about the 1970s-era California Environmental Quality Act, or CEQA. It allows – actually it encourages – critics of any project to file environmental lawsuits to slow or stop it. Unions file lawsuits to get leverage for union-only construction agreements. Businesses file them to hobble competitors. Environmental groups file them to stop growth.

The state repeatedly fails to approve reforms. The only exception is for projects favored by legislators. Steinberg and others wanted the arena, so the Legislature rushed through a CEQA exemption for this project alone. Labor unions were cut in on the deal by granting them a union-only Project Labor Agreement. New hotels that popped up around the new arena are pressured to unionize, given the public subsidies involved.

The arena is located at the west end of one of Sacramento’s crummiest downtown streets. K Street has long been controlled by city officials and their now-defunct redevelopment agency. It mostly resembles Skid Row. There are some new restaurants, including a bar where women dressed as mermaids swim around in a giant fish tank. That one (along with a nearby pizza shop and nightclub) received $3.7 million in city subsidies.

“Redevelopment” has become a key issue in the mayor’s race, but only because the more conservative candidate is blasting Steinberg for his role in eliminating these controversial planning agencies. Steinberg isn’t good on the issue, either, but he helped Brown shut them down when the state needed additional cash.

Yes, there’s a building boom all around the new arena. But, as Stanford Professor Emeritus Roger Noll has long demonstrated, new sports stadiums do not create economic growth. They just shift resources around a city. The same is true for all redevelopment-type projects: They aren’t a long-term source of jobs and growth, but mainly let politicians “build” the kind of projects they prefer.

Despite its wretched summertime heat and the often low-level behavior of its most notorious part-time residents (legislators), Sacramento is a lovely city. It may never be “world class” in the San Francisco, New York, or Paris sense, but it certainly could have a thriving downtown and a business climate not entirely tied to state government.

The problem isn’t primarily one of scandal, although breaking the one-party control of local and state government might lead to higher ethical standards. The real problem is that little happens here unless it’s subsidized by taxpayers, favored by politicians, controlled by unions, and regulated by bureaucrats. Sorry, but that’s the recipe for building a third-world city, not a world-class one.

Steven Greenhut
Steven Greenhut
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Steven Greenhut is a senior fellow and Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.
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