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Winter 2012

The End of Redevelopment

It’s not very often that an actual government agency is abolished.  Not only was this agency abolished by a recent Supreme Court decision, but it freed up billions of tax dollars that can now go to basic local public services such as schools, police and fire.  The agency I am referring to is Redevelopment (RDA).  RDA’s consumed over 12 percent of all property taxes in our state and is one of the largest abusers of eminent domain.

In 1952, when RDA’s were created, the intention was to clean up “urban blight” in cities across the state.  Definitely a noble goal worth funding sixty years ago, but today RDA’s are a multibillion dollar boondoggle that uses our property tax money to fund wealthy private developers. Tens of thousands of private landowners have lost their homes, businesses, churches and farms to pave the way for cities, and in a few cases counties, to subsidize private development projects that will boost the local government sales tax revenue. 

Governor Brown sought to abolish RDA’s in his most recent budget proposal.  His argument is that if our state cannot afford to pay for basic public services such as schools, police and fire then the billions RDA’s siphon away from these services must come to an end.  The Legislature agreed with Governor Brown and passed Senate Bill 1x 26.  Due to extreme pressure by the RDA lobbyists, the Legislature also passed Senate Bill 1x 27 that would allow redevelopment agencies to stay in business if they agreed to pay more money for schools, police and fire. 

Many felt this agreement was a great compromise that would reign in the waste and fraud that has plagued the agency for decades.  There is only one word to explain what led to complete abolishment of RDA’s and that is GREED.  The California League of Cities, the California Redevelopment Association, and others, sued the state arguing that both the bills passed by the legislature were unconstitutional and violated Proposition 22.  Not only did the Supreme Court unanimously uphold SB 1X26 that abolished redevelopment agencies, the Court unplugged RDA’s life support ruling that SB 1x27 violated provisions in the California Constitution. 

This decision was the worst case scenario for redevelopment agencies, but the best decision for private property owners. Abolishing redevelopment agencies was long overdue.  It is not to say that some of the good things RDA’s accomplished such as affordable housing and infrastructure funding should not be revisited by our legislature.  This decision simply means that the wasteful use of our tax dollars will not be used to help developers fund luxury golf courses, fancy hotels, sports arenas and the Mermaid Bar just steps from the state Capitol.

It is argued that RDA’s were a tool local government could used to spur economic development, but unfortunately the agencies sealed their own fate by ignoring the true intention of cleaning up “urban blight”.  Cities felt this was a way to keep property taxes local and there are cases where redevelopment did exactly what it was supposed to.  Loopholes in the law lead RDA’s to abuse the power that was given to them by the legislature.  Last year our state controller audited over a dozen local RDA’s only to find that that they were not paying their fair share to schools, police and fire districts. Other cities used RDA’s to fund infrastructure improvements, but how does that clean up “urban blight”?  It is time to rethink redevelopment in California.  The legislature should revisit this important issue and assist local government with economic development and infrastructure improvements, but not the way it has been done for the last 60 years. 

This victory for private property rights was a long time coming and is one that all private landowners should celebrate. For more information on eminent domain abuse by RDA's please visit the following websites. and ■


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