| California's Redevelopment Agencies|
|Earlier this year, California Governor Jerry Brown sparked controversy with his FY 2012 budget, which called for the elimination of all 400 of the state's Redevelopment Agencies (RDA). The RDAs and their proponents have been fighting back, even filing suit in California's Supreme Court. Though the Governor insists the RDAs aren't necessary, it seems many California residents disagree.|
From the moment Governor Brown signed his budget into law, and maybe before then, RDAs and the communities they represent began working on creative solutions that would enable the Agencies to remain open and operational. One caveat to the Governor's budget is that RDAs can be spared elimination if they agree to pay a fee to the state.
Redevelopment agencies have been at work in California for decades. To date, 420 of them have been created to spur investment in distressed neighborhoods. The agencies are funded using tax increments. A tax increment is the difference in property taxes that occurs when a property is rehabilitated or upgraded. For example, if property taxes on a home were $1,500 before an upgrade and $2,500 after, the $1,000 difference is the tax increment. Instead of going to the California State treasury, that money goes to the local Redevelopment Agency so it can fund further development.
Governor Brown eliminates the RDAs in his 2012 budget so that the money will go directly to the state and help close California's significant budget gap. Opponents of the bill, however, are quick to point out that if neighborhoods aren't being revitalized, property taxes won't increase, and there won't be any additional money for the state.
Harsh criticisms have been leveled at Governor Brown's "pay in" option. Many RDA council members and advocates call the payment option "extortion." Despite the challenges, numerous cities have voted to pay the fees and keep their RDAs up and running. Most recently, the city councils for Thousand Oaks and Menlo Park voted to pay the fee and keep their RDAs. Several other cities, including Millbrae, Belmont, Long Beach, Lakewood and Foster City have already made the same decision.
Some have speculated that this is exactly what Governor Brown had in mind when he submitted his budget: that cities would be willing to pay the fees in order to retain control of redevelopment plans and spending in their respective communities. The state is estimated to receive over $1 billion in fees from RDAs during FY 2012. Meanwhile, all parties wait for the California Supreme Court to rule on the law's constitutionality.
Though the RDAs face a questionable future, one thing is for certain, California residents see value in the agencies. It's not surprising given the current economic climate. With so many people out of work or taking significant cuts in pay, affordable housing is needed. And RDAs help funding affordable housing development. In addition, their overarching development goals and plans can make once depressed neighborhoods attractive to businesses, thereby stimulating economic growth and putting people back to work.