Budget Vote Set for Wednesday; May Determine Redevelopment's Fate

As with so many trends, the use of tax-increment financing for redevelopment began in California. Since being created here in 1952, this vital aspect of redevelopment has spread to 48 other states. And yet if Gov. Jerry Brown's current budget proposal passes, it may very well die in the state where it was born.

It is not going quietly.

In the two weeks since Brown announced his intention to eliminate redevelopment in California as part of his proposal to cut the state's $24 billion deficit, what used to be a relatively obscure system intended to eradicate blight has been thrust into tumultuous debate.

Among the roughly 400 redevelopment agencies that will shut down tomorrow, the vast majority have effectively elected to dig their own graves. That was one of the stipulations of AB X1 26, that cities may serve as their own successor agencies, which will oversee the wind-down of operations, liquidation of assets, and payment of outstanding obligations. 

After weeks of stalemate and tough talk -- on both sides -- the California Redevlopment Association has announced an alternative to Gov. Jerry Brown's intention to eliminate redevelopment. The CRA announced today a compromise plan that would preserve the architecture of redevelopment while allowing the transfer of certain funds to schools (at the expense of affordable housing), thus easing the state's deficit.  

The debate over the fate of redevelopment has called into question the usefulness of redevelopment in places such as, say, Coronado or Palm Desert. But there is no doubt that blight still infects large swaths of the state's major cities -- and that those cities are deeply concerned about the fate of their redevelopment agencies. 

In response to the release of a draft bill that would make the elimination of redevelopment official, the mayors of the state's nine largest cities today sent a stern letter [.pdf] to Gov. Jerry Brown asking him once again to reconsider his intention to eliminate their redevelopment agencies -- along with nearly 400 others across the state. 

California is usually full of surprises. But we at the California Planning & Development Report -- like almost everyone else involved with California land use -- already know what the story of the year is.

If California's redevelopment agencies vanish on July 1, as Gov. Jerry Brown has proposed, it's clear the task of mending the state's blighted neighborhoods will likely grow more complicated. Less obvious is the fact that California's effort to clean up the Earth's atmosphere may grow more difficult as well.

Governor Jerry Brown's "State of the State" speech last night was probably so familiar that you might have thought you'd written it yourself. He outlined, in remarkably plain terms, the crisis that the state faces and, unlike his predecessor, took an adult approach to bipartisan cooperation. In his eyes, there were no girlie-men in the chamber. Instead, his rhetoric suggests that he was speaking to a group of public servants with different ideologies and a common challenge. 

As expected, the budget proposed today by Gov. Jerry Brown calls for the wholesale elimination of redevelopment agencies.  This dramatic move would free up roughly $5 billion in annual tax increments that redevelopment agencies control and would redirect those increments to fund a range of local services. 

The proposal has set off what will likely be an ongoing debate over the value of redevelopment as it has been implemented in the 59 years since California voters approved a constitutional amendment allowing the use of tax increment financing to combat blight. 

The Fitch Ratings service on May 1 announced it was ready to take a sunnier view of tax allocation bonds (TABs) administered by successor agencies in California's redevelopment dissolution. The changed view could affect both the sale prices of existing bonds and the interest rates available to successor agencies when they refinance their existing debt with refunding bonds.

Raw fish will not singlehandedly save urban California. But it can still help.

Like the plot of the Bill Murray movie, Groundhog Day, Sacramento politicians are back to the same story on redevelopment this year. It's a re-run of last year, with proponents of redevelopment re-introducing many of the same bills as last year. 

Attempts to resurrect redevelopment were a flop in 2012 when Governor Jerry Brown vetoed most redevelopment-related bills. This year, there is hope for a different ending, where Brown and his Democratic allies can find themselves in agreement on future steps to aid economic development at the local level. 

The Coalition for Responsible Arena Development filed a notice of intent to bring a lawsuit against the proposed downtown arena in Sacramento. The group opposing the proposed development claims that the project violates CEQA and is a misuse of public funds.