Like the Creature of the Walking Dead, a diabolical scientist with an unquenchable thirst for blood, California redevelopment agencies are also back from the dead. Redevelopment was developed in the 1970’s to fight urban blight, but quickly transformed into a corrupt scheme to divert county and state taxes to cities. What could possibly be wrong with “urban-renewal agencies” which float massive debt and routinely misuse eminent domain to seize private property? Ahem. But I digress.
Assembly Bill 2, by Assemblyman Luis Alejo, D-Salinas, and co-authored by other big-government Democrat Assemblymen and women, Garcia, Brown, Chiu, Cristina Garcia, Holden, McCarty, Mullin, Perea, and Ting, would allow local governments to establish new agencies throughout the state called “Community Revitalization and Investment Authorities,” which will operate just as redevelopment agencies did before they were abolished in 2011.
In 2011, Governor Jerry Brown signed two measures to dissolve redevelopment agencies. But not all agencies went away. AB 26 and AB 27 X1 together abolished redevelopment agencies as they existed at the time and created a voluntary redevelopment program on a smaller scale, according to Assembly legislative analysis.
Almost immediately, the California Redevelopment Association and League of California Cities, along with several other parties, filed suit challenging the two bills. The Supreme Court denied the petition for peremptory writ of mandate with respect to AB 26 X1. However, the Court did grant CRA’s petition with respect to ABX1 27. As a result, all redevelopment agencies were required to dissolve as of February 1, 2012.
Cronyism
But nothing is ever what it seems in government. Alejo’s new bill, dubbed “RDA 2.0,” would give local governments the power to create new entities that would have the same legal authority as the redevelopment agencies dissolved only four years ago. Don’t let the new name fool you. The problem with the new Community Revitalization Investment Authorities is just as with the abolished redevelopment agencies, the new agencies would also have the authority to award too-good-to-be-true deals to favored developers and builders, and take private property via eminent domain.
State Assembly Passes Measure With Republicans
In what appeared to be a carefully orchestrated maneuver, last week 12 Assembly Republicans voted in favor of Alejo’s AB 2.
Many voters expressed grave disappointment; they expected they could, at the very least, count on Republicans to stand up for property rights.
The Assembly Republicans who voted to bring back redevelopment and violate private property rights are: Katcho Achadjian, Catherine Baker, Ling Ling Chang, Matt Hadley, Young Kim, David Lackey, Brian Maienschien, Devon Mathis, Chad Mayes, Marc Steinorth, Marie Waldron, and no doubt orchestrated by Assembly Minority Leader Kristen Olsen.
Supreme Court Ruling Offered a Glimmer of Hope
All along I assumed redevelopment wasn’t really dead, but rather in a holding pattern. However, the U.S. Supreme Court’s 2005 decision in Kelo vs. City of New London, in Connecticut, which upheld the “right” of governments to use eminent domain for redevelopment-type economic projects, meant this was going to be a fight in California. But a Democrat Party dominated state like California could never resist the gift of eminent domain and pay-to-play contracts for very long.
When the California Supreme Court ruled that the state had every right to shut down redevelopment agencies, many were dancing in the streets. But when the high Court also ruled that the other bill that allowed those agencies to come back into existence was unconstitutional, it became clear it was only a matter of time before the vile corporate welfare agencies would be back.
The irony of the Kelo decision was that the project that destroyed the Connecticut neighborhood was eventually abandoned, and the neighborhood has become a dumping ground.
Does Research Back So-Called “Benefits” of Redevelopment?
As Governor Brown’s proposal to eliminate redevelopment agencies in California was being debated, the California Budget Project pulled together a “quick and dirty” review of independent research on redevelopment – often referred to as “tax-increment financing.” This preliminary overview of the research points to two general conclusions:
- “First, it’s unclear whether TIF boosts property values and results in increased property tax revenues. While the research finds mixed results, the most comprehensive independent study of California’s RDAs, conducted by the Public Policy Institute of California (PPIC), found that redevelopment activities in most RDAs studied failed to generate enough growth in property values to account for the tax increment revenues diverted to redevelopment. The PPIC study concluded that “the existing tax increment system is not an effective way to finance redevelopment. Few projects generate enough increase in assessed value to account for their share of these revenues.”
- Second, some academic research finds evidence that TIF projects simply shift economic activity within municipalities rather than creating additional economic activity. For example, one study suggests that when employment increases in TIF project areas, it decreases in other parts of the city, which could mean that TIF projects draw jobs from elsewhere in the city, rather than generating new jobs.
The findings of this body of research was echoed in the Legislative Analyst’s Office’s recent review of the economic literature, which concluded, “there is no reliable evidence that redevelopment projects attract businesses to the state or increase overall economic development in California. The presence of a redevelopment area might shift development from one location to another, but does not significantly increase economic activity statewide.”
By all accounts, the Creature of the Walking Dead Redevelopment agencies should have been long gone… but California politicians can’t help themselves.