Politics

How redevelopment agencies work and why Gov. Brown wants to scrap them

Gov. Jerry Brown speaks to reporters as he announces his proposed budget at the California State Capitol on Jan. 10, 2011 in Sacramento.
Gov. Jerry Brown speaks to reporters as he announces his proposed budget at the California State Capitol on Jan. 10, 2011 in Sacramento.
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Until Gov. Jerry Brown proposed to dissolve redevelopment agencies, few Californians had much reason to think much about them. Redevelopment agencies have been around for at least 60 years and cities and counties have formed 420 of them to fight neighborhood blight. KPCC’s Julie Small tells us how they work.

Cities and counties form redevelopment agencies to invest in and revitalize depressed areas or neighborhoods.

“We build new business, which creates jobs. We’ve done a lot of redevelopment. As far as the areas, blighted areas: we’ve revitalized those areas,” said Burbank Vice-Mayor Jess Talamantes, who chairs his city’s redevelopment agency.

At a recent Sacramento conference of the League of California Cities, Talamantes said redevelopment money has improved housing in Burbank, too.

“We’ve done several revitalizations of apartment buildings that we’ve gone in there and rehabbed them and made them available to homeless families for example,” he said. “So we’ve done a lot of good things with those monies.”

But “those monies” don’t come cheap. Local governments fund redevelopment agencies by diverting property taxes that would otherwise go to school districts or police and firefighters. The people living in cities and counties with redevelopment agencies still need schools, cops and firefighters, so the state government makes up the difference to pay for them.

“The state is essentially subsidizing a huge program that we’re not sure is benefiting the state as a whole,” said Mark Whitaker with California’s Legislative Analyst Office, a non-partisan body that advises lawmakers on fiscal policy.

Whitaker said there’s no credible study that shows redevelopment agencies create more businesses and jobs in California — although they may draw them to a particular city or county.

“So a business that might have formed somewhere instead locates in that redevelopment area. So it might help that area but not the state overall,” he said.

Brown offered a similar rationale for his plan to scrap redevelopment agencies. He estimates the move would save the state $1.7 billion in the next fiscal year. Brown said he wants to take some of the savings and give that money to school districts and fire department around the state. Assemblyman Mike Gatto backs that plan in principle.

“We’re not trying to take anybody’s money,” said Gatto. “We’re trying to get rid of a subsidy that’s existed for too long, that at the very least needs to be tweaked to some degree.”

Gatto, a Burbank Democrat, said city officials worry they’ll lose out if the state scraps redevelopment funding.

“That’s by far the most controversial part of the budget so far,” he said. “It’s the one that’s garnered the most anxiety and it’s the one that’s garnered me the most visits from mayors and other local officials.”

Many city and county officials aren’t waiting to see how the governor’s proposal pans out. In recent weeks, a dozen redevelopment agencies moved quickly to commit billions of dollars to future projects.