Governor wants to scrap redevelopment agencies

A major source of funds for city services would be diverted to state coffers under a proposal Gov. Jerry Brown unveiled this week as part of his effort to slash a $28-billion state deficit.

Brown’s budget calls for the Burbank Redevelopment Agency and nearly 400 like it throughout the state to be dissolved, with most of the $5 billion they create going to the 2011-12 state budget.

Since 1988, Burbank’s four redevelopment zones have raised more than $231 million for the city, according to Ruth Davidson-Guerra, the city’s assistant director of community development.

In the latest budget proposal, the governor’s office is contending that redevelopment agencies unfairly redirect tax dollars from counties and schools.

“The state’s investment in local economic development and redevelopment agencies is less critical than other activities,” the budget states.

Under the proposal, Brown would give cities a new tool to raise money for economic development by allowing them to pass new bond measures or tax increases with approval of 55% of local voters, as opposed to the current two-thirds supermajority requirement.

Local officials decry the move, saying redevelopment money has helped pay for the Buena Vista Library, fire stations, parks, affordable housing projects and much more.

“This is going to directly impact local government,” City Manager Mike Flad said.

He added that he had little faith in the governor’s proposal for economic growth bonds.

“It’s essentially taking a dollar away and saying, ‘Here’s a lottery ticket,’” Flad said. “If I wanted a lottery ticket, I’d buy a lottery ticket.”

Cities create redevelopment zones in blighted areas to encourage economic renewal. The agencies issue bonds to be paid back over 30 or 40 years, and gain authority to keep a higher percentage of property taxes than would otherwise be the case. They then invest in affordable housing, parks and new construction to revitalize moribund areas and raise property tax values and revenues.

Burbank has four such zones: City Centre, Golden State, the Media District and the South San Fernando corridor, which borders Glendale.

The governor’s budget calls for cities to dissolve the redevelopment agencies by July 1, with cities turning over most of the funds and using the rest to retire remaining bond debt.

But before that would happen, Brown would have to overcome major obstacles. In November, voters protected local revenue sources from state raids with the passage of Proposition 22. Voters would also have to agree to lower the threshold for future local tax increases from a two-thirds supermajority to 55%.

“A lot of discussion needs to take place before redevelopment is a target,” Flad said.

State Sen. Carol Liu (D- La Cañada Flintridge) said it was important for the governor to “lay this issue on the table.”

And Assemblyman Mike Gatto (D-Silver Lake) acknowledged that cutting redevelopment agencies is a “difficult choice.”

“But the state is grappling with many difficult choices,” he said.