Brown: Funding Redevelopment Requires Offsetting Cuts

The debate over the fate of redevelopment has called into question the usefulness of redevelopment in places such as, say, Coronado or Palm Desert. But there is no doubt that blight still infects large swaths of the state's major cities -- and that those cities are deeply concerned about the fate of their redevelopment agencies. 

In response to the release of a draft bill that would make the elimination of redevelopment official, the mayors of the state's nine largest cities today sent a stern letter [.pdf] to Gov. Jerry Brown asking him once again to reconsider his intention to eliminate their redevelopment agencies -- along with nearly 400 others across the state. 

California is usually full of surprises. But we at the California Planning & Development Report -- like almost everyone else involved with California land use -- already know what the story of the year is.

Governor Jerry Brown's "State of the State" speech last night was probably so familiar that you might have thought you'd written it yourself. He outlined, in remarkably plain terms, the crisis that the state faces and, unlike his predecessor, took an adult approach to bipartisan cooperation. In his eyes, there were no girlie-men in the chamber. Instead, his rhetoric suggests that he was speaking to a group of public servants with different ideologies and a common challenge. 

As with so many trends, the use of tax-increment financing for redevelopment began in California. Since being created here in 1952, this vital aspect of redevelopment has spread to 48 other states. And yet if Gov. Jerry Brown's current budget proposal passes, it may very well die in the state where it was born.

It is not going quietly.

In the two weeks since Brown announced his intention to eliminate redevelopment in California as part of his proposal to cut the state's $24 billion deficit, what used to be a relatively obscure system intended to eradicate blight has been thrust into tumultuous debate.

As expected, the budget proposed today by Gov. Jerry Brown calls for the wholesale elimination of redevelopment agencies.  This dramatic move would free up roughly $5 billion in annual tax increments that redevelopment agencies control and would redirect those increments to fund a range of local services. 

The proposal has set off what will likely be an ongoing debate over the value of redevelopment as it has been implemented in the 59 years since California voters approved a constitutional amendment allowing the use of tax increment financing to combat blight. 

California's relentless, ever widening budget deficit has claimed another victim: redevelopment's affordable housing funds. 

While the Legislature remains deadlocked on Gov. Jerry Brown's budget proposal, it seems that what does not kill redevelopment may in fact make it stronger. Many observers had written the obituary for the state's redevelopment system back in March when Brown was insisting that the state had to recoup redevelopment's tax increment in order to help plug its $24 billion deficit.

The California Assembly and Senate are expected to vote on the budget proposed by Gov. Jerry Brown. The trailer bill concerning redevelopment, AB 101, emerged from committee today. If enacted, it would codify the dissolution of redevelopment agencies and the winding down of their activities under "successor agencies" and oversight boards. Agency activities would effectively end July 1.

After weeks of stalemate and tough talk -- on both sides -- the California Redevlopment Association has announced an alternative to Gov. Jerry Brown's intention to eliminate redevelopment. The CRA announced today a compromise plan that would preserve the architecture of redevelopment while allowing the transfer of certain funds to schools (at the expense of affordable housing), thus easing the state's deficit.  

If California's redevelopment agencies vanish on July 1, as Gov. Jerry Brown has proposed, it's clear the task of mending the state's blighted neighborhoods will likely grow more complicated. Less obvious is the fact that California's effort to clean up the Earth's atmosphere may grow more difficult as well.

The dissolution of redevelopment agencies may be the biggest bombshell that Gov. Jerry Brown dropped on the land use community. But it is not the only one. He is also targeting the Williamson Act, Enterprise Zones, and fire safety in order to help close the state's $28 billion deficit. 

Enterprise Zones

Like redevelopment project areas, Enterprise Zones are intended to stoke economic development in disadvantaged areas. However, rather than using tax increment financing and being orchestrated by a public agency, Enterprise Zones simply confer tax credits and other financial incentives on businesses that set up shop within the zones. 

Over the past year, even the most irate objectors to Gov. Jerry Brown's dismantling of redevelopment held out hope that in agreeing to kill redevelopment, the legislature would invent a new, better system for stoking local economic growth. Last week, the governor dashed those hopes.