You’ve probably heard of the term “urban blight,” but you might not be as familiar with another term, “Redevelopment Agencies,” or RDAs, a generation-old system set up to spur local improvements across California and address the issue of “blight.” RDAs were first created after WWII and the way they’re financed through local property tax dollars has been in place since the 1950s … but no more.
The California Supreme Court ruled on Dec. 29, 2011 that the state has the right to abolish local RDAs, and ruled illegal a second bill that would allow them to remain in existence if they spend more property tax dollars on local services. Taken together, the two parts of the decision mean that, barring any legislative intervention, the 400-plus local redevelopment agencies around the state will have to shut down for good sometime this year.
RDA supporters immediately said after the ruling they want to work with the legislature to try to find some way to keep RDAs in business. If they are unsuccessful, however, the ruling says those agencies must dissolve this year. Several counties have already begun the process, including pink-slipping thousands of employees across the state.
The rulings are related to two bills enacted as part of the budget deal begun last year. Ruling the elimination of RDAs as legal will allow lawmakers in Sacramento to redirect $1.7 billion to help close the budget gap, as well as potentially forward more money to local governments and as much as $400 million for school districts.
Estimates are that RDAs cost California taxpayers more than $5 billion a year, and have accumulated more than $80 billion in debt. However, some cities have been very successful employing RDAs. The vast majority of San Jose’s downtown is part of a redevelopment district. And Bishop realized a considerable upgrade to its downtown area thanks to its own RDA.
RDAs have pitted county against county. Santa Clara County vocally argued before the court that the agencies should be dissolved, but just 400 miles to the south, Riverside County Supervisor John Benoit told the Red Bluff Daily News he is disappointed that his county lost an essential tool for combating blight.
Tehachapi County Community Development Director David James went so far as to point the finger at Mammoth Lakes and California City on KQED, calling them towns whose RDA “shenanigans” alarmed state legislators. Other officials see it differently.
“Unfortunately, over the years [RDAs] evolved into a honey pot that was tapped to underwrite billions of dollars worth of commercial and other for-profit projects that had nothing to do with reversing blight, but everything to do with subsidizing private real estate ventures that otherwise made no economic sense,” Los Angeles County Supervisor Zev Yaroslavsky commented to the L.A. Times.
During the late 1990s, Mammoth tried to create a redevelopment agency but many advocates of growth temperance, including the late Andrea Mead Lawrence, questioned some of the RDA’s proposals, which they indicated qualified more as “amenities” better left to the private sector. She challenged the proposed RDA in court, and won a decisive victory against what was seen then as an overreach.
Advocates for Mammoth co-founder John Walter remembers that time. “It wasn’t so much being dead set against redevelopment; it was, as Mammoth is prone to do, a big overreach,” Walter told The Sheet. “The Town was trying to throw half the town and the golf courses into the RDA, for tens of millions of dollars in projects that included the Village and its Gondola, which Intrawest ended up paying for.” Town leaders, he suggested, were asking for the moon.
At one point, as Walter recalled, Lawrence entered into settlement discussions with the Town, saying she’d be willing to drop the lawsuit if certain “egregious” parts of the RDA, i.e. the proposed gondola, were removed. The Town, however, stood its ground.
“Taxes would have been diverted that would normally have gone to the county to pay for the bonds floated to build the infrastructure. Today we have a rich county and a broke town and with that RDA, we’d have had the opposite,” he opined.
Walter does, however, lament the loss of improvements to storm drains and other infrastructure needs that would have been realized. “When you use [RDAs] to rehab a slum, it makes sense. It’s great for urban renewal,” Walter said. “It’s great to pave streets and so on to get new industry to come in, but not to build gondolas. That’s between the town and a developer, and shouldn’t involve pulling the county’s money away to do it.”
Walter pointed out that recently there was some talk of a redevelopment agency to spruce up parts of Main Street, and indicated that if it were proposed correctly, he and the Advocates could support it. “No one’s going to start one at this time, now that the state can cancel them at its’ discretion,” he qualified.
With the hindsight of history, Town Councilmember John Eastman, who was involved in the RDA process at the time, found some common ground with Walter, but disagreed when it came to the court decision.
“In retrospect, [overreaching was] one area where Ms. Lawrence was correct,” Eastman acknowledged. “When we were going into the RDA, the town was in a heyday and we saw it as being a great economic stimulus, especially when it came to getting the Village built.” But, the Town took too big of a bite at the apple, he added. “We were trying to get included areas that possibly, history has proven, were too aggressive. Having said that, the court that ruled against the town is noted as being one of the most liberal in the country, and instead of cutting things in half and telling us we’re overstepping our bounds in one area, but were in line in other
areas they made a black and white decision and threw out the entire RDA.”
Eastman went on to say it was a victory of sorts for the anti-growth community at the time, but maintained that the town lost as a result of the decision.
“Having been involved in the process, it’s my strong personal opinion, that’s one of the main reasons we don’t have a parking structure in the Village today,” Eastman posited. “If we’d have had an RDA, we could have paid for about $15 million in infrastructure work that was shifted to the developer, which couldn’t afford that much extra expense.”
Given the court ruling, Eastman doesn’t anticipate a future attempt at an RDA. “Those days are gone,” he said. “That we don’t have one is a good thing, as it turns out; the dissolution process involves a lot of economic impact, and loss of employees.”
Mono County’s State Senator Ted Gaines (R-Roseville) lent his support to Brown’s push to abolish RDAs. The agencies, Gaines said in an earlier interview, are little more than “cash grabs for big developers who vie to curry favor with their legislators.” As the lone Republican who crossed party lines and supported AB26 in the Senate, Gaines provided the decisive swing vote assuring passage.
Eliminating redevelopment agencies, he indicated, means valuable additional money freed up for law enforcement and schools, Gaines’ top two stated priorities.