FLASHREPORT

THEY'RE BACK..REDEVELOPMENT AGENCIES TIMES TWO

Assemblywoman Diane Harkey

[Publisher's Note:  The FlashReport is pleased to present this original, exclusive commentary from Republican Assemblywoman Diane Harkey -- Flash]

If you are new to the FlashReport, please check out the main site and the acclaimed FlashReport Weblog on California politics.

Redevelopment times two appears to be returning to California, less than a year after the program was dissolved by the Legislature at the direction of Governor Brown. After Redevelopment Agencies (RDAs) were disbanded, members of both parties, the education establishment, and property rights advocates applauded the action. But less than a year later, there are actually two bills that use government structures, debt and eminent domain to tempt local government to invest dollars they don't have for projects that people don't want and that private investment cannot justify. It remains to be seen if Governor Brown actually signs the two bills in to law.

Monday, AB 2144, authored by Assembly Speaker John Perez, passed 53-27 off the floor. The bill makes it easier for local governments to create Infrastructure Finance Districts (IFD), essentially redevelopment agencies by a different name. Tuesday, SB 1156 by President Pro-Tem of the Senate, Darrel Steinberg, actually reconstituted Redevelopment Agencies for certain central planning uses without allowing the former benefit of retaining the property tax increment (associated with the property's appreciation over time) at the local level. The California Teachers Association may win, but not necessarily the schools, kids or parents. Both bills allow locals to tax and indebt themselves easier, and for those school districts that received little to no state backfill because they meet the minimum funding level with local property taxes, there is no win.

In 2011 under the guise of cutting spending to balance the budget, Governor Jerry Brown and state Democrats tried to pull the plug on California’s 425 redevelopment agencies. Initially falling a few votes short with the majority party, the effort was later joined by several Republicans that truly believed that Redevelopment Agencies would be disbanded and that property owners that had suffered abuse of eminent domain would be vindicated. The law was upheld by the State Supreme Court, and the Governor and others appeared vindicated. But a deal in Sacramento is seldom a deal that holds, and the first rule of government, do no harm seems not to apply.

While never a proponent of RDAs due to the potential for property rights abuses and debt, I opposed the knee-jerk disbanding of the program and argued that locals should be given time to switch gears and make alternative plans. I believed that in reality, the Governor’s proposal might simply take $1.7 billion in local RDA funds claiming to backfill state education coffers, but merely robbing local governments that had planned ahead and had reserves. The state has still not collected the $1.7 billion, and lawsuits over what the actual amount disbanded RDAs owe the state have ensued.

The two bills that passed out of the Legislature on a majority party only vote contain the following language to:

• Create the potential for the seizure of private property through eminent domain.
• Allow for local taxation, with AB 2144 allowing for the creation of debt with a 55% voter threshold, as opposed to 2/3.
• Expand debt term from 30 years to 40 years.
• Significantly expand the use for which public funds may be spent, including "Sustainable Communities" strategies, high speed rail accommodations, open space, environmental mitigation, and the purchase of land and property for development purposes.
• Require prevailing wages and labor compliance programs, including any infrastructure investments supporting retail or transit project areas.
• Contain no regulatory reforms with regard to California Environmental Quality Act compliance, business permitting costs, tax reform, the payment of costly prevailing wages, or construction litigation.

As you can see, the bills reward labor, give CEQA more teeth to delay stop local projects thereby driving up costs, and reward social engineering, vertical living and mass transit. The bills do not represent a market solution to the problems with former RDAs or the disarray associated with the hasty dissolution. As a result of the abrupt shut down, cities with RDA debt have seen their bonds rated as junk. It remains to be seen if said municipalities will opt to tax themselves more to get out of the state created mess. The bills could be seen by some as an effort to try to correct some of the problems with the knee jerk dissolution. But in fact the price may be too high, if it encourages or forces municipalities into further quandaries with labor, property rights, debt and environmental litigation.

The Republicans that supported the effort are to be lauded for their willingness to step up on principal, and if the other side of the aisle could do the same the state could begin to crawl out of the deficit and debt spiral. With taxes on the ballot, trigger cuts to education and services to the truly needy and disabled on the table, local municipalities filing for bankruptcy protection, it would behoove us as a state to work together to remedy some of the wrongs, not double down on heavy-handed state government mandates. While it remains to be seen what the Governor will do, I am skeptical that he will veto bills that facilitate one-size fits all centralized planning for housing and transportation, expand power in Sacramento and leave locals holding the bag. Redevelopment times two may be another way to fulfill the political axiom of rewarding friends and punishing enemies.
_________________________________

Assemblywoman Diane Harkey (R-Dana Point) represents the 73rd State Assembly District, which includes Southern Orange County and Northern San Diego County.