Ending Redevelopment Agencies: Brown's Illusory Victory

Legal victory not what it seems when you dig a little deeper

On the surface, it appeared last week that Gov. Jerry Brown won a rare victory in the shaping of the California state budget when the state Supreme Court ruled that the legislature had the right to eliminate local redevelopment agencies.

But appearances are not always as they seem, and clearly that is the case here.

Created three quarters of a century ago, these independent local government entities were permitted to invest a slice of local property taxes in various infrastructure projects, often in collaboration with the private sector. Combined, the more than 400 agencies were able to control about $5 billion in local tax revenues.

Brown complained that redevelopment agencies were more helpful to small, narrow elements of society than the public good.

That's because while redevelopment agency revenues financed such structures as convention centers, low-cost housing, and public arenas, their siphoned local government dollars meant less money for public schools, roads, public safety and the panoply of local government services. Given the state's onerous budget deficit, the legislature voted to end redevelopment agencies, and the move was validated by the recent court decision.

State leaders have predicted that as much as $1 billion annually will flow back into local coffers, helping to make up for some of the funds that have been denied in recent years.

But the story isn't over.

It turns out that redevelopment agencies owe nearly $30 billion in bond debt, which was the way they leveraged local tax dollars into larger pools of money for projects that would be paid for over many years.

Those debts must be honored before redevelopment tax dollars can be returned to local governments -- something that may take as long as 15 years. And reality takes a good deal of the sheen off the glow of the reassigned redevelopment agency pot of gold.

Long term, the ending of redevelopment agencies will mean more money for cities and their local services.

In the near term, however, the struggle for dollars at the local level will persist, leaving local governments just as starved for funds tomorrow as they were last week. 

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