LOCAL CITIES OPPOSE GOVERNOR’S PROPOSAL TO ELIMINATE REDEVELOPMENT FUNDING

Plan is opposed by cities, labor, development interests, and affordable housing advocates

By Miriam Raftery

January 27, 2011 (San Diego’s East County) – Governor Jerry Brown has proposed to eliminate redevelopment agencies (RDAs), a move he predicts would save the cash-strapped state $1.7 billion in the next fiscal year. The Governor’s plan would take away funds for improving blighted areas and instead divert those dollars to school districts, counties, and state coffers. But the plan is being met with strenuous opposition from cities and redevelopment entities around the state—including here in East County.

Statewide, approximately 400 redevelopment agencies are funded through about $5 billion a year in property taxes which are generated by properties within the redevelopment areas.

When done right, redevelopment has revitalized blighted communities, generated new local revenues through new businesses brought in by redevelopment, and created affordable housing for area residents. San Diego’s Gaslamp is an example of a community where redevelopment has been praised for its positive impact on the region, including economic benefits.
 

Done wrong, redevelopment has allowed for some abuses. A Los Angeles Times investigation last year found examples of this, such as cities that declared farmlands “blighted” in order to take property taxes from future development. Some 120 cities also managed to spend $700 million in affordable housing funds from 200-2008 without building a single new housing unit, the L.A. Times has reported. The Times also cited incidents of corruption and favoritism, such as a city manager’s daughter named to head up a redevelopment agency.
 

In San Diego, however, politicians on both sides of the aisle have been outspoken in support of redevelopment. Earlier this week, San Diego’s City Council voted 7-1 to oppose Brown’s proposal.
 

“I can guarantee you that without redevelopment, we would not have seen the resurgence that is downtown San Diego,” Republican Councilman Kevin Faulconer said, noting that San Diego has made far more money from redevelopment that it has lost, since downtown hotel and sales taxes from the redeveloped areas have generated $60 million a year in revenues.
 

Democratic City Councilman Todd Gloria said redevelopment is especially helpful for revitalizing low-income areas. “The overall net benefit to our city is undeniable,” he said, according to a San Diego Union-Tribune article.
 

Councilwoman Sherri Lightner cast the only opposing vote—not because she opposes redevelopment, but because she fears the Governor would cut other important areas instead if the plan fails to win approval from the Legislature.
 

In El Cajon, redevelopment dollars have been used to help attract new businesses to downtown with enticements such as grants for façade improvements or interior remodeling of older, outmoded, or run-down buildings. Redevelopment funds have also been used for community enhancement programs such as Clean & Safe on Main Street, Lend-a-hand cleanups, mural painting, and more.
 

“If you take power and opportunity of redevelopment away from the community, you will stall development in downtown,” said Cindi Fargo, president of the El Cajon Community Development Corporation, the redevelopment entity for the city. If RDA funds are lost, opportunities for funding improvements to the East County Performing Arts Center, public infrastructure programs, parking, economic and housing development activities could all be at risk, she added.
 

Fargo observes that “redevelopment is the ultimate example of taxation with representation. “The RDA geographic district is defined, goals are set and approved by those within its area, governed by city council or an appointed body in their stead,” she said, noting that funds for ongoing redevelopment are generated through public-private partnerships .
 

“Like any business, or even a family, a city must be able to make a budget. When the state feels free to drain the bank account, there is no way for the city to plan for the future,” said Bill Wells, Mayor Pro Tem of El Cajon. Wells accused the Legislature of acting “like an addict” feeding an addiction to spending by raiding city coffers and next, redevelopment agency funding.
 

Others have argued that the problem is not state spending, but rather a shortage of revenues in California, where voters have been averse to approving tax increases even to fund public services and have restricted state funding options through various ballot propositions, starting with Proposition 13 which froze property taxes. Facing over a $20 billion budget shortfall, the Governor has also proposed a range of other cuts including slashing fire-fighting funding for Cal-Fire, a wage freeze for state employees, cuts in education, consolidation of some government functions, and more.
 

The League of California Cities has weighed in against Brown’s proposal. So has the State Building and Construction Trades Council of California, and not surprisingly, the California Redevelopment Association.
 

The State Building and Construction Trades Council has issued a statement indicating that if Brown succeeds in eliminating redevelopment agencies, the plan would eliminate 300,000 jobs a year provided by redevelopment, mostly in construction. The labor group also argues that the move would reduce state and local agencies of $2 billion in revenues from redevelopment projects and encourage sprawling development, which in turn would limit construction of affordable housing and increase greenhouse gasses as people drive farther.
 

Even if approved by the Legislature—a prospect that seems questionable given the strong opposition lining up—it will face challenges in court. Opponents argue that the measure would be unconstitutional and would violate Proposition 22. Passed by voters with a 61% margin, Prop 22 “prohibits the state from borrowing or taking funds used for transportation, redevelopment or local government projects and services,” stated a ballot summary on Prop. 22 provided, ironically, by Jerry Brown when he was the state’s Attorney General.
 

“We urge him to consider carefully the constitutional and policy flaws associated with attempting to get rid of local redevelopment and enterprise zones, and the jobs these programs create,” League of California Cities President said, adding that the League’s officers met with Governor Brown last week. “While we oppose these proposals to take away critical local economic development tools, we look forward to working with him in the effort to improve our state.”