[Editor’s Note: Mr. Shirey is Executive Director of the California Redevelopment Assn., and he wrote this story for the Sacramento Bee, where it appeared Tuesday, amplifying a sketchily reported proposal that Gov. Brown has indicated he rejects.]
After months of contentious debate over the governor's proposal to abolish redevelopment agencies in California, groups representing local governments and redevelopment agencies have offered an alternative proposal that strikes a reasonable compromise for all involved.
This proposal provides the state of California and schools with about $2.7 billion over the next 10 years to help reduce the budget deficit. It also retains redevelopment in California, while instituting tough reforms that increase accountability and ensure redevelopment is being used responsibly to maximize job creation, revitalize run-down communities, clean up contaminated properties, finance infrastructure improvements and build affordable housing. Already, a bipartisan coalition of legislators has come together in support of this alternative package. There are two elements to the package: revenues and reform.
The Way It Works
Revenues: Under the plan, in the 2011-12 budget year, redevelopment agencies could voluntarily contribute an equivalent of 20 percent of their net tax-increment funds to local schools instead. These funds may be used from any redevelopment funding source, including low- to moderate-income housing funds.
In addition, agencies could contribute up to 10 percent of non-housing funds that year and each year thereafter for 10 years. In exchange for these voluntary contributions, redevelopment agencies would be granted extensions of their projects' life spans.
After conducting a survey of local redevelopment agencies throughout the state, we estimate this plan would raise $700 million to $1 billion for the first budget year, and an additional $1.7 billion for the following nine years. In all, the plan could mean approximately $2.7 billion over the 10-year life of the proposal, more than what the governor estimates would be available for deficit reduction from the elimination of redevelopment agencies.
And the revenues are far more reliable, because the alternative avoids the costly and contentious litigation that is sure to follow if the governor's plan is adopted. Because our plan calls for voluntary contributions, it doesn't violate the state Constitution or the will of the voters who supported Prop. 22 in November.
Check the Record
Reform: Redevelopment has been a powerful tool to revitalize downtrodden communities and create jobs and economic activity that otherwise would not have occurred. In fact, redevelopment investments and construction activities are responsible for supporting more than 300,000 jobs each year.
While the vast majority of local agencies act responsibly, reforms are needed to increase the accountability and efficiency of all agencies. Toward that end, the California Redevelopment Assn. also has offered a package of important accountability reforms, including:
• Enhanced reporting: It requires the state controller to update and toughen audit guidelines for redevelopment agencies and requires agencies to file with the state an annual report on their finances and activities. The availability of consistent, transparent audits will lead to more accountability and will help expose any abuses.
• Focus even more on job creation: The reform proposal refines the statutory authority of redevelopment agencies to provide direct assistance to businesses to build new or expand existing manufacturing and industrial facilities to grow jobs. Agencies would also be authorized to assist local businesses with financing for new technologies, machinery and equipment that also expand manufacturing and industrial job-creation. Energy efficiency: The reform would expand redevelopment tools to facilitate intensified infill development of urban areas, including assisting with the creation of commercial facilities, jobs and higher-density residential housing in the urban core, close to public transit. Agencies would also be authorized to provide financial and other assistance to remodel commercial and residential buildings to be more energy efficient to reduce pollution and greenhouse gases.
• Promote more affordable housing: Redevelopment agencies are the second-largest funder of affordable housing in California behind only the federal government. In fact, since 1993, agencies have helped create nearly 100,000 units of affordable housing. Our package contains 14 reforms to ensure agencies are spending housing funds responsibly. These include limitations on the use of funds for administration and other significant changes to make agencies spend housing funds more efficiently on the actual production of affordable housing units.
They say politics is the art of compromise, and this package is a reasonable solution to deliver on that promise.
The two-pronged package is constitutional, avoids messy litigation against the state and represents a win-win for our state, local governments and taxpayers. It provides the state with revenues to help bridge the daunting budget gap, while also retaining redevelopment as an important local government tool to create jobs and grow the California economy.
