THE MURKY FUTURE OF REDEVELOPMENT AGENCIES

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, AUGUST 12, 2011, OR THEREAFTER

BY THOMAS D. ELIAS

“THE MURKY FUTURE OF REDEVELOPMENT AGENCIES”

It’s fair to say they did it to themselves. The future of California’s more than 400 municipal redevelopment agencies is completely unclear today, more than one month after Gov. Jerry Brown signed a budget enabling bill that threatened to eliminate them.

Redevelopment agencies, usually called simply RDAs, previously existed unmolested since the 1960s, thriving on something called “tax increment financing.” Simply put, that mean RDAs accomplished their ends by declaring some parts of their cities “blighted,” then buying up that land and in turn selling it off to developers. The developers built everything from shopping malls to low income housing projects to industrial buildings and professional sports arenas like Staples Center in Los Angeles and entertainment complexes like one across the street from Staples.

The RDAs then pocketed the difference between property taxes paid before the blight declaration and those on the new developments and used the money for a variety of city projects, plus many new land purchases. Whoever might have lived in the “blighted” areas was basically on their own when it came to finding new quarters.

Even in times when state and city governments and public schools were strapped for money, the RDAs had plenty. When their continued existence was first questioned just after Jerry Brown returned to the governor’s office last January, they quickly earmarked several billion dollars for future projects, some of them completely unspecified. They also borrowed another billion or so via bonds. So big has been their money pool that the month-old state budget counts on an annual infusion of $1.7 billion from RDAs as a key balancing method.

But RDAs may not be dead, after all. Not only are many of the city governments (city council members often double as RDA board members) that protested their elimination contending in court that it was illegal for Brown and the Legislature to wipe them out, but another budget enabling bill allows RDAs to resurrect themselves – if they contribute more to public schools.

All each has to do is fork over to the state’s general fund a share of the same $1.7 billion that the budget law would otherwise seize and continue contributing heavily in future years, with the money earmarked for education. Brown and lawmakers justify this by contending that RDA money is often misspent on projects that benefit private developers. One example: A list of projects set out earlier this year by the Los Angeles Community Redevelopment Agency set aside $52 million for a parking garage next to an art museum now being built by wealthy developer Eli Broad (He’s the B in KB Homes) to house his art collection and make it viewable by the public. The same list had only $32 million in projects for all of the poverty-riddled South Los Angeles area, including districts like Watts.

Even though they’re suing, most RDAs may eventually take the alternative offered in the resurrection bill. Some are already paying up. After all, in the maneuvering that preceded passage of the RDA elimination measure, the agencies offered to contribute hundreds of millions of dollars this year to ease state budget woes, with somewhat lesser amounts to come in subsequent years.

If they were willing to make that concession, why would their board members not take a hard look at reconstituting themselves as thriftier outfits that actively help schoolkids?

Yes, the RDAs rattled sabers after both bills affecting them passed. “This budget…relies on the illegal extortion of revenues from redevelopment agencies that will never materialize,” said John Shirey, executive director of the statewide Redevelopment Association. “This plan is unconstitutional, violating Proposition 22 which was passed overwhelmingly by voters in November. We’ll (fight) to prevent these unconstitutional measures from becoming law.”

But once they’ve taken a good look at the resurrection bill, many cities may opt out of the legal action and start living with a reduced stature.

At the same time, all this movement on the RDA front should offer a sobering thought to the thousands of special districts – for fire protection, sewage, water supplies and many other functions – which now sit atop a pile of cash amounting to more than $40 billion. That thought: If it can happen to RDAs, it can also happen to special districts, so maybe it’s time they also kicked in a goodly chunk of their cached money to help the state, its schools and parks and more, through a rough financial time. If they don’t act on their own, someone just might act against them.

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Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net