Posted by: Lisa Pampuch | March 15, 2011

Killing RDAs an illusion of a solution

I’m deeply troubled by Gov. Jerry Brown’s proposal to eliminate redevelopment agencies as part of his plan to close the state of California’s $26.6 billion budget gap.

RDAs are financed by using a portion of increased property taxes created by increased property values (increment) compared to the property taxes based on property values at the time the RDA was created (base). RDAs use those funds to end blight, to spur economic development, and to increase affordable housing. RDAs are required by state law to use at least 20 percent of their funds to create affordable housing, which makes them the “second largest funder of affordable housing, behind only the federal government,” according to the League of California Cities.

If approved by the California legislature, Brown’s proposal would eliminate RDAs and transfer the property tax revenue that they currently collect to the state. Which brings me to one of my main concerns about Brown’s proposal: I trust my city council members/RDA directors to spend tax dollars wisely more than I trust state legislators. In addition, I have much more input into how dollars are spent when they’re controlled by local elected officials rather than politicians in Sacramento. It’s easier to hold local elected officials accountable, to boot.

In Morgan Hill, RDA funds have paid for many important, highly visible projects, like these:

  • New library building
  • Community center
  • Aquatics center
  • Outdoor sports complex
  • Recreation center
  • Senior center
  • Youth center
  • Downtown streetscape improvements

Morgan Hill RDA funds have also paid for many other equally important but less glamorous projects, like these:

  • Butterfield Boulevard construction
  • Dunne Avenue widening and overpass
  • Tennant Avenue widening and overpass
  • Traffic light installations
  • Drainage system improvements

How many of those vital projects would have been completed if Morgan Hill residents had to get in line with other communities and ask the state to pay for them? Not many, I’m willing to bet. For example, the state twice refused twice to share library bond money with Morgan Hill to help build the much-needed and well-used Morgan Hill Library that was finally built in 2007 without state help and thanks in large part to RDA funds.

State law has allowed for the creation of redevelopment agencies for more than 50 years, and the approximately 400 redevelopment agencies in California are fully enmeshed in the fabric of our communities. Suddenly ending RDAs is asking for a painful demonstration of the law of unintended consequences. The League of California Cities predicts job losses, reduced economic growth (at a time when we can least afford to squelch economic activity), and less affordable housing.

But it’s impossible to predict all of the fallout from ripping at the fabric of municipal government financing by ripping out RDAs. Where will the fraying end? Where will the holes appear? It’s impossible to know for certain.

But the proposal to kill RDAs isn’t just a bad idea that’s likely to create unpleasant unintended consequences. It’s also likely to be illegal. Voters overwhelmingly approved Proposition 22 last year, which bars state grabs of local money. If the state legislature attempts to kill RDAs, the legislation will be tied up in expensive litigation for years. That litigation will line the pockets of lawyers but drain public funds — taxpayer dollars — at the state and local levels, while the state’s budget woes continue.

There has to be room for compromise. Multiple politicians are now floating proposals that would allow RDAs to continue while diverting some RDA dollars to the state. I have concerns about these proposals, but they are much preferable to killing RDAs outright, as Brown is proposing, and enduring the ensuing litigation.

State Controller John Chiang recently issued a suspiciously timed and highly questionable audit of 18 of the approximately 400 RDAs in California that criticizes the operation of RDAs. This is a red herring intended to divert attention from the real question facing Californians: Is killing RDAs the right way to balance the state budget?

If RDAs have problems, the answer is to fix those problems, not to eliminate RDAs. Killing RDAs is an irresponsible plan that’s bad for everyone, except perhaps state legislators looking for a quick fix to the state’s structural budget problems. It’s up to us to let them know it’s a bad plan and only an illusion of a solution.



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