Redevelopment: a concept whose time has gone?
Governor Jerry Brown doesn’t have a whole lot of options in his quest for a State budget that contains real solutions. In his budget message last week, Brown focused on one means to garner revenue for education by recommending that the Community Redevelopment Agencies (CRA) be discontinued and their money be redirected toward schools.
Already, the long knives are out, but there may merit in the concept, mostly because the CRA process has become increasingly more difficult to justify.
The redevelopment process was created to assist local governments in turning blighted areas into property tax generating entities. To do so, the state and local governments agreed to defer the difference between what was previously paid in property taxes and what it generated once the blight was removed. This “tax increment” became the revenue stream that helped to pay back the loan taken by the CRA to generate the development.
Those who have long opposed CRAs claimed that this was a tax on local residents imposed without a vote of the people. That’s because the CRAs, which are not City Councils, but are often populated by the same people, have the right to create financing instruments, such as bonds, by a simple majority vote.
Along with this financial opposition, opponents have called the declaration of blight a joke. For example, during the abortive Heart of the City process undertaken by Redondo Beach a decade ago, the area behind the power plant was originally scheduled to be a redevelopment area, since “blight” was clear to the naked eye. However, a decade earlier, the rules for a declaration of blight were tightened to make such a ruling more difficult if the underlying land has a good chance to create value if developed under normal circumstances.
On the positive side, CRAs have been responsible for some dramatic successes, particularly in Los Angeles, where dramatic rises in property values and sales tax generating revenue can be easily quantified.
So, now two cogent arguments come together in the cauldron of a severe fiscal emergency and something has to give. The mirrors and blue smoke of the Schwarzenegger administration have dissipated and the new Governor has started to fulfill his pledge of transparency and honesty in budgeting.
Someone’s ox will be gored.
This battle, with the Governor and school districts on one side and cities and counties on the other, will be fascinating to watch, because in it will be a clear indication whether the common good, or individual self interest, will prevail. If the latter wins, we will have more years of funny money games that get us nowhere, except, perhaps, to bankruptcy.
However, if the former wins out, the light at the end of the tunnel may not be an oncoming train after all. ER
