Existing Policy Tools Can Help Cities Can Prosper Without Redevelopment

When Jerry Brown first proposed killing redevelopment -- back in January 2011, when he released his first budget -- he said he would replace it with some other economic development tool. After Brown succeeded -- when he released his second budget, in January 2012, just days after the Supreme Court killed redevelopment – his tune changed, ever so slightly. He said he would consider bringing redevelopment back if it didn't affect the state's general fund.

Fair enough.

Now that the California state budget is mostly out of the way, it's time to see what – if anything – the state will do this year to plug the redevelopment gap.

And as redevelopment bills move forward, it's pretty much shaping up like this: The legislature is likely to pass something. The question is whether Gov. Jerry Brown will sign anything.

While most of California's cities undergo the arduous wind-down of their redevelopment agencies, a handful of cities have been going about business as usual. For most of the cities that never had redevelopment agencies, business has been, and probably will continue to be, good. Redevelopment took root in economically disadvantaged places, so the likes of Beverly Hills, Rolling Hills Estates, and Sausalito are carrying on contentedly.

Against all odds, redevelopment isn't quite history yet in California. Some projects continue. Most cities are engaged in a long wind-down process that is consuming considerable time and attention. And the state legislature is considering a variety of options to revive redevelopment, or at least get it back on life support.

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. 

The new rules of redevelopment – if the courts agree – are now clear: You're dead, but you can buy your way back to life. That's probably enough to keep most redevelopment agencies in business. But is it enough for cities to continue to do redevelopment deals?

That's not clear, though redevelopment agencies have gotten accustomed to doing deals with less and less money over the years. Also not clear is whether this is the end-game on redevelopment or the first step in an effort to truly reform redevelopment – a possibility that seemed far more likely in January than it does now.

Since January we have witnessed the unusual spectacle of elected local officials throughout the state expressing intense and emotional anger and frustration about the possible end to redevelopment -- and no reaction at all from anybody else. 

Nothing from the people in blighted neighborhoods, who supposedly benefit from better housing and more jobs and more retail choices.

George Skelton, the venerable Los Angeles Times political columnist, recently came out in favor of Gov. Jerry Brown's plan to eliminate redevelopment. Skelton's Exhibit #1 is the Dive Bar, a hangout on derelict K Street in downtown Sacramento that is now one of the city's hottest night spots -- complete with a mermaid tank -- thanks partly to the redevelopment subsidies provided to the project's developer.

Ever since Gov. Jerry Brown first announced his intention to eliminate redevelopment agencies the redevelopment establishment – led by the California Redevelopment Association – has taken a hard line: no elimination, no compromise, no relinquishment of the tax increment. The CRA is even preparing for a legal battle based on its interpretation of both the State Constitution and Proposition 22.

Gov. Jerry Brown's proposed state budget will do more than merely plug a $24 billion deficit. According to some, it will also lead to shuttered factories, recidivism among ex-convicts, and the flight of companies and jobs to rival states such as Arizona, Nevada, and Texas. Faltering clothing manufacturer American Apparel could be pushed closer to the brink of bankruptcy. 

At least if Brown's proposal to do away with Enterprise Zones is adopted along with the proposed elimination of the redevelopment program.

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.

As the popularity of motor sports, especially stock car racing, blossomed during the late 1990s and 2000s, a number of would-be race track developers and local government officials in California pursued high-speed economic dreams. However, actually building a race track in California has proven to be far more difficult than proposing a track and even winning development entitlements.