Redevelopment Agencies Across California Could be Phased Out by July 1st.

By Mario Conde

If Gov. Jerry Brown and State lawmakers agree in the new budget, redevelopment agencies all across California could be phased out by July 1st.

Governor Brown proposed in his 2011 budget a bold move that would free up roughly $5 billion in annual tax increments that redevelopment agencies control and redirect those increments to fund a range of services. John Shirey, executive director of the California Redevelopment Association, called the proposal “smoke and mirrors that will bring little financial gain for the State, but will cause widespread and significant economic pain in communities throughout California.”

Among the reason why the Governor proposes to eliminate is because Redevelopment agencies have failed to develop affordable housing, which is supposed to consume 20 percent of agencies’ income. Instead, the governor’s budget says, many agencies have built up large balances. In the aggregate, redevelopment agencies do not create a net increase in development. Development that occurs in redevelopment project areas would have occurred elsewhere in the state.

”The State and local governments have very few tools to stimulate the economy, but redevelopment is the exception,” said the CRA’s Shirey in a statement.  “Redevelopment is already a locally-governed service which generates hundreds of thousands of jobs.”

By July, existing agencies would be disbanded and their debts would be gradually retired by local successor agencies. Starting in 2012-13, the amount of tax increment remaining after paying pre-existing debts and contractual obligation would be distributed to cities, counties, and K-14 schools in amounts proportionate to their share of the base countywide property tax. The net gain for these entities is estimated to be $3 billion annually. Monies left in agencies’ coffers that are earmarked for low- and moderate-income housing would be shifted to local housing authorities for the same purpose. Fund future local economic development projects via a 55-percent voter approval for limited tax increases and bonding against local revenues for projects that are currently done by redevelopment agencies.

“Without decisive action, the state’s severe budget problems will persist, threatening economic recovery, job growth, public education and the quality of life in California,” said Gov. Brown in a statement. “The adoption of this budget will position the state to lead the country as it slowly recovers from the Great Recession.”

The Calexico City Council discussed this matter at their meeting Tuesday and will be taking steps, along with other cities in the Imperial Valley in order to ask legislators to back down on eliminating the redevelopment agencies. The item was brought up by RDA Director Oscar Rodriquez and urged to council to act immediately to stop this measure. Rodriquez said that if the budget is passed in March, the Redevelopment Agencies would be gone by July. He also said that now a simple majority is required to pass a budget and with a majority democratic assembly, the possibility of having redevelopment eliminated is highly possible.

“Our redevelopment agency has supported the Calexico Chamber of Commerce, Neighborhood House, and the Shelters. If RDA is gone then it will create a snowball that will be detrimental for the community.” He said. Rodriquez said that he has been in communications with other RDA’s in the valley and are in the same position and will be taking the same stand against the state budget proposal. “We need to get our state representatives on board, the council, and the groups that have benefited from our founding and send a message to Sacramento. If we need to go to Sacramento to talk them personally, then we must do it.”

Rodriquez also mentioned that if RDA is gone than it will add a million to the current deficit of the City and will force RDA staff to be moved to other departments or be layoff. Also, the elimination of the redevelopment agency will affect upcoming projects in Calexico such as the Grand Plaza that is negotiating a bond deal for infrastructure.

The RDA director said that the California Redevelopment Association is making a resolution against this proposal where Calexico and other cities in California will join in a united opposition to this budget proposal.