Lockyer Supports Redevelopment End

FEB. 3, 2011


State Treasurer Bill Lockyer just this week joined the chorus of calls to deny funding for local redevelopment as one way to reduce the state’s $25 billion budget shortfall. Gov. Jerry Brown’s January budget proposal proposed the elimination of redevelopment agencies, forcing a divide between state and local government that continues to grow.

Local government officials vehemently defend redevelopment, while many state officials support Brown’s proposal.

Lockyer, a veteran Democrat who also has served as attorney general and Senate majority leader, lends heavy weight to Brown’s proposal. Tom Dresslar, Lockyer’s communication director, said Lockyer likes the governor’s proposal because “it is sound, and makes fiscal sense.”

Dresslar said that in the middle of the state’s financial crisis, redevelopment is not the best use of taxpayer dollars. “We need to focus on core government services, like public safety, education and even health care,” he said. “This should be the top priority.”

Lockyer is concerned about the role government plays in redevelopment as well. Dresslar added:

Taking tax dollars from services to subsidize developers should not continue. With local government slashing services, the best use of our resources needs to be redirected.

The Treasurer agrees with the Governor and doesn’t deny that redevelopment has done some good, but the state does not have the resources to keep funding developers.

The controller’s office reported that in 2008-09, California redevelopment agencies collected $5.7 billion in taxes, but only funneled $1.2 billion to schools and local agencies.

Dresslar said his office calculated that, in the last five years, redevelopment agencies had a net tax increment of $18.3 billion, but only created a total of 138,000 jobs. “Tax Increment Financing” is a redevelopment financing technique, used by local governments in redevelopment, to keep tax money locally.

Following Brown’s budget proposal, the Sacramento Press Club hosted a debate this week between Assemblyman Chris Norby, R-Fullerton, and California Redevelopment Association President Linda Barton. Their debate demonstrated the vastness of the ideological divide.

Norby, in agreement with Brown’s proposal to eliminate the agencies, offered many statistics disproving the supposed need for redevelopment. And he backed limited government instead of the expanded role redevelopment agencies have taken, which competes with private business.

Barton, also the city manager of Livermore, countered that redevelopment is necessary because “it is the only job-creating tool local governments have.” Barton said that redevelopment agencies are the largest provider of affordable housing in the state, and to eliminate them would also eliminate thousands of jobs.

Most local government officials echo Barton’s sentiment that redevelopment funds local jobs, and can’t be cut without dire financial consequences. Last week the mayors of nine of the state’s largest cities met with Brown to ask that he reconsider his plan for redevelopment agencies. Not one of the mayors supported the proposed budget cut.

Barton said that the elimination of redevelopment would cause a loss of 300,000 jobs in the state. But that’s not what the state controller’s office found in audits examining redevelopment as far back as 1997.

“There is no evidence that redevelopment is a net creator of jobs. It’s a net drag on taxpayers,” said Norby at the debate, citing a 1998 Public Policy Institute of California study.

The two-year study found that redevelopment agencies — 93 percent of which are city agencies — generate only slightly more than half of the property tax revenues they receive each year.

Once a redevelopment agency forms a project area, any increase in property taxes goes to the agency for the life of the project, which can be for 30 years or more. The rationale for this tax revenue is that the redevelopment agency improvements in the area are responsible for increasing property values, the PPIC study found.

But Norby said the cities in the state without redevelopment agencies are not pockets of blight, while the cities with redevelopment agencies have not been successful in ending blight, despite the massive amounts of money spent on subsidized development projects.

Dresslar agreed:

Even if you think redevelopment is a great idea and has performed admirably, taking a lot of money from other services is a bad idea. We just don’t have enough money in this state.

How to convince local government officials to support elimination of redevelopment agencies? That’s another problem, Dresslar said, adding, “I would leave that to the experts to solve.”

However, he said pursuing zero-based budgeting would go a long way to solving much more than just the state’s current budget deficit. “If every agency had to start every year at zero, and not base budgets on the previous year’s spending, and having to actually justify budgets and spending before receiving approval from the Legislature, the state would be better off.”

Norby summed it up:

Redevelopment does not inspire consumers to spend more on cars or at the mall. The state is littered with half-empty auto malls and strip malls. It’s a tool that has not worked.

Katy Grimes is CalWatchdog’s news reporter.

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