Gov. Jerry Brown wants to abolish redevelopment agencies statewide, calling them “piggy banks” for local officials — a mild statement compared to critics who see them as nothing more than “slush funds” that all too often enrich developers with taxpayer dollars that should go to schools, cops and other basic services.
If the governor gets his way — a long shot given the ferocious opposition from cities and counties — $1.7 billion would be saved annually and used to remove the state’s $25-billion deficit and restore California to a sound financial footing.
Burbank city officials have written the governor insisting the redevelopment agencies are vital to the city’s economic health.
Glendale officials, in an effort to keep Brown from getting his hands on their redevelopment money, took it a step further. Following the lead of Los Angeles, the city two weeks ago voted at a special meeting to lock up $480 million in redevelopment revenues — more than half as much as L.A. is trying to squirrel away.
“What do you lose if you take away this tool? I don’t know what Glendale will be like in 20 years if we don’t have this redevelopment money.”
That’s the point of view of Philip Lanzafame, Glendale’s redevelopment chief, as he reels off a long list of projects: the economic engines of the Glendale Galleria and Americana at Brand, the adult recreation center, affordable housing, a fire station, improved safety at a rail crossing, and infrastructure investments along San Fernando Road.
In the last 30 years, local governments across California have become addicted to redevelopment funds — property taxes generated by projects they fund, money that stays with the agencies rather than going into general funds, schools and state treasury.
It’s not small change that is involved.
Burbank is spending $67 million this year through its redevelopment agency, nearly half as much as the $145 million available to the General Fund for salaries, benefits and core city services.
Glendale has budgeted $70 million for the Redevelopment Agency compared with $173 million in the General Fund. Last year, the Redevelopment Agency spent $88 million, $27 million more than was budgeted.
To Lanzafame, the governor’s proposal is like “throwing the baby out with the bath water” — a phrase that comes up often for redevelopment officials
Glendale has big plans for the future: holding the threat of eminent domain over the Golden Key Hotel so developer Rick Caruso can expand retail at the Americana, ushering in the Museum of Neon Art, securing open space and library renovations, a downtown soccer field, direct access to Griffith Park and a long list of other projects.
If the tax increment financing of the Redevelopment Agency is taken away, Glendale would be in serious trouble in carrying out its effort to drive revenue through the direct and indirect benefits of investments like the $80 million in public money put into the Americana that has created tremendous economic benefits, a public open space and 1,700 jobs, many of them going to people from the regional jobs center.
Part of the problem is Glendale’s history of fiscal responsibility. When other cities went wild with property tax increases, creating the crisis that produced Proposition 13, Glendale kept its rates low and spending under control.
The result is the city keeps only 13% of its property tax revenue, up to a third less than Burbank and Pasadena.
“Redevelopment money is critical to Glendale’s future,” said Lanzafame, who acknowledged other cities have abused redevelopment zone laws by engaging heavily in the “fiscalization of land-use policy” rather making decisions based on the best use of land and balancing economic and community benefits.
Nowhere in California is this truer than in Los Angeles, where so much of redevelopment revenue has gone into subsidizing luxury hotels, luxury condominiums, luxury entertainment facilities like Staples Center, L.A. Live and the Kodak Theater — not removing blight from the city’s vast areas of poverty in South L.A. and the Eastside.
“Redevelopment hasn't always stayed focused on alleviating blight and poverty,” Los Angeles redevelopment commissioner Madeline Janis admitted in an op-ed article last week in the L.A. Times. “It is not always clear, for instance, that subsidies for certain development projects are the best use of public money or that these developments need public investment to be built. In some areas, redevelopment has been aimed at making the well-off more comfortable.”
Janis, like Lanzafame, argues the abuses must be stopped by tightening the law and restoring redevelopment agencies to their original purpose.
Given the urgency of the state’s fiscal crisis, the lack of transparency in so much of what redevelopment agencies do and the extent of the abuses, we’ve gone past the point of no return.
Despite the validity of much of what Lanzafame has to say, the governor is right in calling for abolishing the redevelopment agencies.
The challenge the governor, redevelopment officials and the Legislature face is how to balance the budget in the short term while reinventing a new tool for local governments to redevelop blighted areas in a way in which the public benefits far outweigh the private benefits to developers and other special interests.
RON KAYE can be reached at firstname.lastname@example.org. Share your stories and concerns with him.