Behind the 1925 Law that Almost Stopped SoCal Development

In 1939, a three day festival was held in the small Southern California community of Temple City. Events included a circus performance, a flower show, a children's pet parade, and a pie eating contest. On Saturday, there was a grand parade featuring an equestrian show and something called a "phony money auction." But this wasn't your typical holiday festival. It was a bond-lifting jubilee, celebrating the city's final freedom from the massive debt it had incurred as a result of a California law known as the Mattoon Act. In Temple City, the act had caused such chaos that the climax of the jubilee was a nighttime bond burning ceremony. And Temple City was not alone. Although it was repealed in 1933, the havoc the Mattoon Act wreaked on Southern California would be felt for years to come.

The Acquisition and Improvement Act—popularly called the Mattoon Act after its author, Los Angeles County Counselor Everett Mattoon—was passed by the California legislature in May of 1925. This sweeping bill promised to streamline and provide funding for the construction of needed public works. It made condemnation of property desired for public utilities quicker and easier. Most importantly, it gave enormous power to community authorities, including the right to create "improvement districts" that crossed city and county lines. For example, when a new sewer was needed in the eastern section of Pasadena and adjacent unincorporated communities, the area surrounding the sewer that would benefit from its construction was designated as an "improvement area" for that project. Bonds were then taken out to fund the construction of the sewer. Landowners in the improvement district would help pay off the bonds with a yearly ad valorem tax, and everyone's toilets would be happy.

The passage of the bill was initially met with huge public support. Considered the "most constructive piece of legislation by this legislature," the LA Times believed it would be the cure for:

Crowded roads, where one travels at a snail's pace behind heavily loaded trucks, business districts crammed into narrow streets, subdivisions hastily and unwisely planned and great communities springing up without parks to provide breathing space or recreational facilities- which have been unfortunate by-products of the phenomenal growth of Los Angeles within the past ten years.

Millions of dollars worth of Mattoon Act Bonds were soon issued to pay for the construction of thousands of miles of new highways and roads in Southern California. The law was a boon for real estate developers, who used public funds to install street lamps, build parks, and widen and pave roads in their newly subdivided neighborhoods. For city councils, utility companies, and developers, the act was turning out to be a godsend.

But popular opinion quickly shifted. Buried deep within the legalese of the act were provisions inspired by the progressive, populist sentiment of the early twentieth century. These provisions, which were meant to foster community spirit, responsibility, and equality, soon backfired and gave power to a chosen few. Citizens in a given improvement area had no say in public works they were forced to pay for. Many homeowners found themselves in several improvement areas at one time and were required to pay taxes for them all. Even worse, if a landowner in a given improvement district failed to pay his ad valorem tax, it fell to the neighbors to pay the tax for him. Soon delinquent taxes were piling up on landowners all across Southern California. In October of 1926, a mass meeting was held at the Ambassador Hotel. It was filled with landowners residing west of Westlake who were furious that they were expected to shoulder two-thirds of the cost of widening Wilshire Boulevard, an improvement that would benefit the entire city of Los Angeles.

The act still had strong support from companies supplying raw materials and contractors who were making a killing off Mattoon-funded projects. But by 1928, many of the very industries that had supported the passage of the act had joined the public in calling for a change. According to the LA Times:

Objections to certain provisions of the Mattoon Act which have been voiced since the law was passed in 1925 have attained the proportions of a chorus of dissatisfaction in which the bankers, bond houses, building and loan associations, mortgage companies and real estate bodies are joining, each with their particular tune ... The Mattoon Act has made some properties practically unsalable and financial houses refuse to make loans on the real estate coming under the act. Brokers are down to business this year in obtaining the amendments which their legislative committee has suggested. They will have headquarters in Sacramento where propaganda will be disseminated to obtain necessary amendments.

They had been swayed by the fact that smaller and newer communities like Lynwood, South Gate, Monrovia, Culver City, Inglewood, Temple City, Torrance, Redondo Beach, Hawthorne, Bell, and Burbank found their growth dramatically slowed by excessive assessments. Delinquent taxes in the city of Monrovia skyrocketed between 1928 and 1929. In South Gate, homeownership "dropped from 90 percent in 1929, to 56.6 percent in 1930 and 54.6 percent in 1935." Thousands of people lost their homes due to foreclosure caused by delinquent taxes. The stock market crash of 1929 only exacerbated an already bad situation. The feelings of frustrated homeowners were voiced in numerous letters to the editor like this one:

Too Much Mattoon Act

I live in a little suburban city, where we are cursed with excessive taxation, Mattoon Act and a quarrelsome city council. Our town is dead. Many have refused to pay taxes. Numerous 100-foot boulevards have been pushed through where they were not needed … I know a man who came here last week to buy a home. After riding over this beautiful country, said "this is fine." After looking up the title, taxes, and street bonds and Mattoon Act, he said, "I will not buy a home or live in your town. You can't give me a clear title. Too many liens will eat up the value of the property..."
Signed- THE OLD DOCTOR

Even Everett Mattoon, embarrassed to have the flawed bill associated with his name, called for the act's reform as early as 1928. He eventually sponsored a bill calling for its repeal, blaming overzealous real estate promoters for abusing its contents. So angry were many in the LA community that when he rose to speak at one meeting regarding the act, he was almost not allowed to take the stage. Community action groups were formed and political careers ruined, yet it took years for the California legislature to adequately address the problem. Millions of dollars of improvements, including the expansion and widening of major thoroughfares like Atlantic Boulevard, Sepulveda Boulevard, and Manchester Avenue were completed under the act, even as the bonds used to pay for them remained unpaid.

The Mattoon Act was finally repealed, and bills were passed to help refund and relieve citizens and cities from excessive assessments and tax burdens. However, in 1935, the US Supreme Court ruled that the Mattoon Act had been valid, which meant that cities and tax payers were still obligated to pay off the bonds. Various targeted relief plans were put into action, including a gas tax that was used to pay off road bonds. Landowners were given final sums that they could settle with cash. These moves were considered urgent:

Rapid relief of districts which were burdened under the inequitable liens created under the Acquisition and Improvement District Act of 1925 … is a highly important factor in improving basic business conditions not only in the districts directly affected but also in the Los Angeles area as a whole.

By the late 1930s, many communities finally found themselves fully relieved of the debt incurred under Mattoon Act Bonds. It was reported that civic pride, lending for homeownership, and real estate values skyrocketed in areas once stigmatized as improvement districts. New real estate tracts were rapidly opened and, a few years later, the post-war boom would turn many of the small communities once stifled by the Mattoon Act into thriving cities. Niche improvement districts are currently legal in California for both business and tourism areas. But they have little to do with the freewheeling Mattoon Act, which has become an afterthought, a relic from a much more naïve and optimistic time.  

— Special thanks to Paul Spitzerri at the Workman-Temple Family Homestead Museum

Further reading:
· My Blue Heaven by Becky M. Nicolaides

· How One Ohio Native Became the Mother of Hollywood [Curbed LA]
· The Rise and Fall of One Architect's Modern Torrance Utopia [Curbed LA]
· Curbed Features [Curbed LA]