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Jerry Brown Takes Aim at Redevelopment Agencies

Olga Khazan |
January 26, 2011 | 4:30 p.m. PST

Senior Editor

At a press conference this afternoon, Governor Jerry Brown called California's redevelopment agencies a "piggy bank" - one that the state should now tap in order to breach its $25-billion deficit. Shutting the state's redevelopment agencies, he said, is key to saving nearly $2 billion and ending the agencies' tendency to squirrel away funds while producing few results.

“The hallways are going to be crowded in the coming months with people who say, ‘Please keep the money coming.’ And my message is, ‘The money is not there,’” Brown said.

The announcement came on the heels of the state's decision to audit 18 of the agencies to see how they spend their money.

"The agencies to be reviewed include those in Los Angeles, Fresno, San Jose and the counties of Sacramento and Riverside," the LA Times reported.

Several of the cities listed in an LA Times database of redevelopment agencies show "warning signs" that they aren't doing much with taxpayer funds.

The governor's plan has ardent supporters and detractors on both sides of the aisle. Some say that cities struggling with high unemployment and housing issues can't afford to have the agencies' coffers raided by the state. Others say history has shown that redevelopment agencies don't work as well as private enterprise when it comes to combatting urban blight.

Reuters reports:

"The plan stunned Chris McKenzie, executive director of the League of California Cities. Redevelopment agencies are critical for spurring business when the state's unemployment rate tops 12 percent, he said: "We think it's bad for California, bad for jobs and bad for the economy."

But others say Brown, 72, should stand firm, arguing redevelopment in California has strayed far from rebuilding blighted areas and that cities are using agencies to shelter revenue while encouraging developers to seek subsidies.

"That's why you see affluent suburban communities with automalls adjacent to freeways," said Steven Frates, director of research at the Davenport Institute at Pepperdine University's School of Public Policy."

As the New York Times explains, redevelopment agencies often end up with a too-large slice of the property tax pie, meaning the state must make up the difference in financing for schools and other services. Because of California's fiscal situation, that's an arrangement the state can no longer afford.

"Redevelopment agencies have become a mechanism for cities to keep a larger share of property tax revenue while squeezing the counties and forcing the state to pay up for schools. That in turn creates an incentive for cities to be expansive in their definition of blight and to extend the life of redevelopment zones that are supposed to disappear once their bonds are paid off.

Governor Brown says eliminating the agencies would both save the state money and free $1.9 billion a year for schools and local services."



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