The Senate Governance and Finance Committee held a hearing on Wednesday to discuss Governor Brown’s proposal to eliminate redevelopment. Attendees included State Treasurer Bill Lockyer, California Redevelopment Association Executive Director John Shirey, and League of California Cities Vice President Bill Bogaard, among others. Prior to the hearing, the Legislative Analyst’s Office released a report to the Legislature that, in short, concluded redevelopment should in fact be eliminated and that RDAs do not greatly enhance the state’s economy. The report argues that alternative tools should be used instead in order to get local governments to finance economic development, and that revenues should simply be treated as property taxes because “Doing so avoids further complicating the state’s K-14 financing system or providing disproportionate benefits to K-14 districts in those counties where redevelopment was used extensively.”
The CRA has posited that many jobs will be lost if redevelopment is eliminated. Specifically, it could jeopardize more than 304,000 jobs annually. And while the LAO attempts to counter this claim in its report, the authors of a report commissioned by the CRA have shown that the LAO’s analysis is deeply flawed. Simply put, the LAO’s critique is based on a fundamental misunderstanding of the report's methodology. For more on why the authors of the CRA report take issue with the LAO’s findings, see here.
Other highlights from the LAO’s report include:
- “While redevelopment leads to economic development within project areas, there is no reliable evidence that it attracts businesses to the state or increases overall regional economic development. Instead, the limited academic literature on this topic finds that—viewed from the perspective of an entire city or region—the effect of this program on property values is minimal.
- The independent research we reviewed found little evidence that redevelopment increases jobs. That is—similar to the analyses of property values—the research typically finds that any employment gains in the project areas are offset by losses in other parts of the region.
- Lacking any reliable evidence that the agencies’ activities increase statewide tax revenues, we assume that a substantial portion of these revenues would have been generated anyway elsewhere in the region or state.
- Redevelopment agencies lack some of the key accountability and transparency elements common to other local agencies. Specifically, unlike other local agencies, redevelopment agencies can incur debt without voter approval."
You can read the full report from the LAO here.
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