Redevelopment agencies have been bleeding public schools, counties and special districts for years. Now the governor has taken a long-overdue stand to recapture this lost revenue. This year’s budget calls for the state to take $2 billion in RDA funds over the next 2 years to augment public education. These are not really “takings” at all but a restoration of property tax revenues to serve public needs, rather than enrich private developers.
RDA tax increment diversions now consume over $5 billion annually, or 10% of all state property taxes. This comes at a direct expense to school districts and counties. Education has some Prop. 98 protections, but cutbacks this year have been deep. Counties have been hit hard, too. Since 1990, Los Angeles County alone has lost $2.7 billion in revenues to redevelopment diversions.
The California Redevelopment Association and its pricey lobbyists brag that RDAs do not levy taxes. True. What’s worse is that they hijack the revenues of other agencies, forcing them to raise taxes or seek relief from the state. Under the guise of economic development, they subsidize luxury hotels, big box retailers, auto dealerships and movie megaplexes. Often they buy raw land and simply sit on it for years. Visit areas San Bernardino or Oakland where failed projects have left a patchwork of fenced off empty lots.
RDA funds are used mostly to subsidize commercial development to garner sales tax for city coffers. But the inter-city sales tax wars have led to extreme fiscalization of land use with its bias for commercial zoning at the expense of residential zoning. Numerous half-empty ghost malls and vacant auto dealerships testify to the over-building of commercial development—not because of market demand but local RDA subsidies.
Should public money build Costcos or classrooms? Hotels or hospitals?
Opposition to RDA abuses has long come from conservatives concerned about the abuse of eminent domain. Homeowners and entrepreneurs have seen their land and businesses seized to benefit well connected developers. Now, liberals are seeing the light. “If the state legislature were asked were asked to directly appropriate money for local shopping centers, they would never do it,” said former assemblyman and Sacramento mayor Phil Isenburg. “Because the current subsidy is mostly hidden, it continues.”
Rather than a temporary fix to alleviate blight, RDAs have become a permanent drain on California public resources that must be stopped. And this current fiscal free fall has become the perfect time to do just that.
To work, however, the fix must be permanent. The typical 40-year sunsets for agencies must be enforced. Agencies must be shut down and the revenues restored to public services. If the agencies really have succeeded at ending blight, let them shut down and return the revenues to our schools, libraries, parks, clinics and other public needs.
The legislature has allowed the redevelopment boil to fester for too long. Let it be lanced and let the healing begin.