California’s New Governor Takes Aim at Redevelopment
California’s new governor, Jerry Brown, recently submitted his proposed budget for fiscal year 2011, and it has some affordable housing advocates concerned. The state has a $25 billion gap to contend with, which means nearly every service and agency will be reduced to some degree. Governor Brown’s budget, however, calls for the outright elimination of the state’s redevelopment agencies.
California redevelopment agencies are funded via tax increments, a portion of local property taxes that is diverted to the agencies and used specifically for local building projects – including affordable housing. Governor Brown’s proposed budget redistributes about $1.7 billion in tax increment money to other local programs and services, and reassigns redevelopment agency services to other existing departments and agencies. There are about 420 redevelopment agencies in the state of California, many of which have existed for decades.
Though the idea of diverting money for the sake of redevelopment sounds like a good idea, proponents of Governor Brown’s budget say it costs the state a lot of money. Local tax money is often diverted away from police and fire departments and school districts. The state then provides money to help close the gap. Some argue that it’s money the state is forced to pay for a program that may or may not actually be effective. Supporters of the agencies say they attract bring business, jobs and residents. But opponents contend that redevelopment money may attract businesses or developers to a particular city, but it doesn’t attract them to the state of California as a whole.
Brown’s proposal has set the stage for a fierce battle of wills that has been raging since he first released his budget. City officials have sharply criticized the proposal, pointing to the overwhelming need for improvements to things like infrastructure and additional affordable housing – both of which are funded through redevelopment agencies.
Needless to say, employees of the redevelopment agencies are concerned. Chris Essel, Chief Executive Director of the Los Angeles Community Redevelopment Agency (CRA) says the changes proposed by Governor Brown would “totally derail” several projects that the CRA already has in the works.
While elimination of the agencies would, in theory, save money, Essel said it’s also important to note that the Los Angeles CRA alone generates about $150 million in new tax increment money every year. That money would be lost if the agency is dissolved, as would the money that’s generated by other CRAs across the state. Because a final budget has not yet been passed for California, affordable housing advocates are encouraged to contact Governor Brown’s office regarding his proposed elimination of CRAs.
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