California redevelopment agencies are plagued by a lack of transparency and have allegedly shorted schools by at least $40 million, according to a report released by the State Controller’s office Monday morning. 

The Hollywood and Highland Center, one of many redevelopment projects (Creative Commons)

State Controller John Chiang slammed agencies for their alleged lack of accountability and transparency, saying that his office found questionable use of redevelopment funds. In Palm Desert, the report said, redevelopment dollars were used to renovate a luxury golf resort.

“For a government activity which consumes more than $5.5 billion of public resources annually, we should be troubled that there are no objective performance measures demonstrating that taxpayer’s are receiving optimal return for each invested dollar,” said Chiang.

Gov. Jerry Brown’s plan to eliminate local redevelop redevelopment agencies is gaining momentum in the days approaching the state’s March 10 deadline to pass a budget, and local groups’ defense of agencies has grown more fierce.

The elimination of redevelopment agencies, which are supposed to foment economic growth in “blighted” areas, will free up funds to help the state government to close it $26 billion budget gap. The 50/50 budget proposal would cut $12 billion in government spending and generate $12 billion in tax extensions.

Chiang said in the statement that the agency’s assessments of local areas are often so arbitrary that almost any area can be deemed “blighted.”

Meanwhile, a group of Long Beach business leaders has kicked off an advertising campaign to drum up support for California’s local redevelopment agencies, which will be eliminated under Gov. Jerry Brown’s proposed budget.

The radio spot argues that the move to kill the agencies, which analysts say would shave $1.7 billion off the state deficit and use the funds for education and other priorities, is unconstitutional.

The ad accuses state politicians of “stealing from local government funds” and credits redevelopment agencies for creating 300,000 jobs in California. They argue that Proposition 22, which voters approved in the Nov. 2011 elections, prevents the state government from taking money form local governments.

“Just a few months ago, we passed Prop 22 to end the state’s theft of local government funds. But did they listen to us? No,” the ad’s voiceover says. 

The ad campaign, sponsored by the League of California Cities, may be too little too late.

Brown’s budget proposal appears to be picking up steam and most recently, on March 4, received the blessing of the Bay Area Council, an association of major businesses in the Bay Area.

Advocates for redevelopment agencies say they will sue the state if the agencies are eliminated.

Reach Ryan Faughnder here.