By Shawn Steel

California National Committeeman

Republican National Committee

Something strange happened in the first six months of the Jerry Brown administration. He killed the invidious Redevelopment Agencies [RDA] which many California cities used to confiscate private property against unwilling land owners, in the name of abolishing “blighted” neighborhoods. Through Assembly bill 26X, the legislature voted to disband redevelopment agencies unless they are willing to share property tax revenue in the future to help finance public schools.

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By Richard Lyon, Senior Vice President, California Building Industry Association

California’s Economic Development Department recently reported that our state shed more than 29,000 jobs in the month of May – giving rise to fears that the California economy could be headed for a double dip recession.  In light of this reality, you’d think that policymakers in Sacramento would be doing everything they could to increase job opportunities and stimulate economic growth in our state.

Unfortunately, you’d be wrong.

Rather than work to create jobs, the Legislature last week passed legislation to effectively abolish local redevelopment agencies in California. In doing so, the Legislature has turned its back on one of the few economic development tools available to local governments’ to create jobs and economic opportunity.

Eliminating redevelopment is bad economic policy and will kill jobs and economic expansion at the worst possible time.  Statewide:

• Redevelopment activities support an average of 304,000 full- and part-time private sector jobs in a typical year, including 170,600 construction jobs;
• Redevelopment contributes over $40 billion annually to California’s economy in the generation of goods and services; and
• Redevelopment construction activities generate $2 billion in state and local taxes in a typical year.

Abolishing redevelopment is extremely shortsighted. California’s construction sectors are experiencing historically high levels of unemployment. More so now than ever before, California needs to embrace policies of opportunity and economic growth.

Redevelopment offers that hope of opportunity and growth. It works to kick-start construction in urban areas that the business community largely cannot undertake on its own. By remediating environmental waste, building basic infrastructure, and making other improvements, redevelopment lures private investment in housing, jobs and businesses that otherwise would not occur. These investments mean jobs and opportunity in our most downtrodden communities.

Fortunately, by vetoing the main budget bills, the Governor has temporarily postponed the implementation of the redevelopment elimination legislation. The Legislature should take this time to pull back the legislation.

Instead of abolishing redevelopment, the legislature should instead adopt the compromise reforms being supported by a broad coalition of local governments, organized labor, housing advocates and business leaders that would reform redevelopment to strengthen what works and eliminate what doesn’t.

SB 286 (Wright) and AB 276 (Alejo) significantly enhance transparency and accountability, reduce the footprint of redevelopment, provide funding to schools, and ensure more targeted uses of redevelopment dollars.

Eliminating redevelopment will thrust our state economy into further recession, by reducing jobs and stalling economic growth. We should mend rather than end redevelopment. It is an essential tool to improve our economy and stimulate job-creation.

By Chris Norby, Assemblyman, 72nd District

Yesterday, Governor Brown formally signed AB26x, a long-overdue bill that ends redevelopment agencies in California as we have known them for over 50 years.

Redevelopment was originally created by the legislature to address urban blight and to revitalize decaying residential and commercial districts. Cities were empowered to create local redevelopment agencies with enhanced powers to divert property taxes, sell bonds, expand eminent domain and subsidize private development.

By the 1980s, a tool once used by a few large older cities had spread statewide. Newer suburbs were declaring raw land to be blighted to build new malls, auto plazas and big box retail centers—all subsidized at taxpayer expense. By 2000, over 30% of all urbanized land statewide had been declared blighted and included in redevelopment areas.

Tax increment financing diverted ever more property tax revenues into redevelopment agencies—at the expense of public safety and education. By 2010, over 12% of tax revenues had been hijacked by redevelopment agencies—over $6 billion statewide.

Eminent domain became the tool of choice to assemble the huge new parcels needed for redevelopment projects—all motivated by promised economic benefits. Homeowners, small merchants and even churches were targeted for taking on behalf of politically connected developers.

Repeated studies showed that redevelopment subsidies produced no net economic benefits. Savvy retailers, auto dealers and NFL team owners played one city against another for greater subsidies and land write-downs, but for the state as a whole it was a zero-sum game. California became littered with half empty malls, auto plazas and strip centers all over-built with huge public subsidies.

Meanwhile, bonded indebtedness soared to $90 billion, as agencies could encumber future property taxes without a vote of their constituents.

With the state facing a $25 billion shortfall, the losses to redevelopment agencies became unsustainable. The state could no longer backfill the fiscal bleeding to local schools and services. The signing of AB 26x saves the state budget an immediate $1.7 billion. Once the debts are paid off the full $6 billion annually will be restored to fund public services and education.

Redevelopment was never indented to be a permanent drain on the public treasury, never intended to be a permanent cash cow to subsidize development that the market alone could not support.  Credit Governor Brown for ending a program that had long outlived its usefulness.

by Lacy Kelly, CEO

Association of California Cities – Orange County

The Association of California Cities – Orange County (ACC-OC) believes that redevelopment agencies need reform, not elimination.

In fact, the vast majority of redevelopment agencies and the projects they oversee are proven economic generators for California’s cities and provide exceptional returns on investment for the taxpayer.

Balancing these benefits with meaningful change is precisely why the ACC-OC developed a comprehensive set of redevelopment reform best practices. These ideals are meant to protect the new jobs, tax revenue and beneficial projects produced by the redevelopment process, while simultaneously addressing the isolated problems.

For example, we believe in greater transparency in the redevelopment process through robust online disclosures. In fact, our principles require that agencies post the past five years of redevelopment expenditures as well as all future funding obligations. Additionally, taxpayer oversight committees should be mandated for all redevelopment agencies in order to ensure that the original intent of redevelopment is protected and government abuse eliminated.

In Orange County, for example, the Orange County Transportation Authority has had great success with its Measure M-mandated Taxpayer Oversight Committee. This panel scrutinizes projects and expenditures against the original intent of the voter-approved half-cent sales tax. This can serve as a model for all redevelopment agencies.

We strongly recommend that redevelopment agencies also follow consistent, statewide benchmarks to curb abuse, including:

• Cap administrative costs at 20 percent
• Prohibit land banking for speculative purposes
• Promote and develop affordable housing within redevelopment projects

All of the ACC-OC’s Redevelopment Best Practices can be found online at www.ACCOC.org/publications.

The ACC-OC agrees that redevelopment reform is needed.  But we must not throw the baby out with the bathwater. The wholesale elimination of a tool that creates jobs, increases revenues and removes blight during a time when cities are struggling to keep police on the streets and parks maintained is highly misguided and threatens economic viability in many California communities.

The ACC-OC will continue its vocal support for redevelopment agencies and champion the reforms necessary to ensure that they remain healthy, sustainable tools for California cities.

By Allan Mansoor – Assemblyman, 68th District

Last week I voted to end redevelopment agencies (RDAs). While RDAs have been the source of wasteful spending at the local level, the biggest problem with RDAs is that they are a conduit used to initiate eminent domain actions against private property owners. In doing so, cities pick winners and losers by interfering with the free market.

The proposal to end RDAs was introduced by Democrats. Democrats generally oppose eminent domain reform measures and regularly use RDAs to support earmarked spending in their districts. With this in mind, their proposal deserved skepticism. What was their motive?

At a time of major budget deficits, the Democrat budget proposal included cuts to education along with increases to welfare and social services and new benefits to public employees. Their motivation in ending RDAs wasn’t an altruistic vision that RDAs are wrong. They wanted RDA money to pay off their public employee union supporters.

Redevelopment agencies are funded from the $45 billion Californians pay in property taxes. The RDA money in question is about $1 billion in savings that will be recognized after RDAs are eliminated. These are property tax revenues that I think should remain with local government. I am aware that there is abuse at the local level, but that abuse pales in comparison to what can happen at the state level where the abuse is more severe and more difficult to correct.

Raiding local treasuries is particularly troublesome in the current economic environment. I served on the Costa Mesa City Council and am aware of the fiscal crises facing many cities. For many cities, the unexpected taking of RDA funds is going to make tough times even worse.

The measure to end RDAs was actually two measures. One ended RDAs and the other took their money. My Republican colleagues who called the proposal a “money grab” were right when they focused only on the end result. But taken by itself, the bill to end RDAs was one of the most important pieces of legislation affecting private property rights in recent memory. I supported it even though I opposed the other. Unfortunately, the money-grab-measure passed.

In California, even the slightest victory in the fight for protecting property rights is cause for celebration, but victories public employee unions give us on a silver platter are hollow victories. As long as public employee unions control Sacramento, they can recreate RDAs anytime RDAs will serve their interests.