The Secret To Cutting the Cost of Redevelopment

Gov. Brown's plan to eliminate local redevelopment agencies is one piece of his budget plan that has real momentum.

Republicans seem to be warming to it. So if cities lose the ability to fund infrastructure and other projects through redevelopment, what will they do?

The answer, according to the local government web site PublicCEO, may lie in entities called Infrastructure Financing Districts, or IFDs. State legislation being considered would make them easier to use.

What are they? PublicCEO explains:

"Under current law, local agencies may establish an IFD to finance the purchase, construction, or improvement of any project that offers community-wide benefits and an estimated useful life of 15 years or longer.

"These projects may include highways, transit, water systems, flood control, solid waste facilities, parks, and even child care facilities."

Similar to redevelopment, IFD funds are based primarily on tax-increment revenue. But unlike redevelopment, an IFD does not divert revenue from school districts.

While this distinction limits an IFD's tax increment to a mere fraction of what redevelopment can do, it also relieves the state of having to backfill schools for their lost revenue."

Translation: IFDs give local governments the ability to build things and pay for it with resulting increases in taxes -- but without the nasty cost to the schools and the state budget that made redevelopment a target for Brown.

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