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VICA: California Needs Alternatives to Dissolved Redevelopment Agencies

Posted: July 23, 2013 4:00 p.m.
Updated: July 23, 2013 4:00 p.m.

In February 2012, California officially dissolved its 425 redevelopment agencies, which are locally controlled entities that used property tax revenue to partner with developers for projects in blighted areas.

Eighteen months later, RDAs are still stuck in a frustrating limbo, with questions about financial obligations for transferred assets and finding alternate funding for projects approved and underway from the program.

Moreover, California is now one of only two states that do not have a redevelopment program in place (along with Arizona), which only adds to California’s undesirable reputation for being unfriendly to development.

Through its redevelopment agency, Santa Clarita spent about $48 million to upgrade downtown Newhall, resulting in more than 300 jobs. Without redevelopment, this development would not have been possible, and Newhall would not have the storefronts, infrastructure and landscape it does now.

So where do cities go from here? How can we continue to build up our blighted and underdeveloped neighborhoods at a time when funding is scarce?

Two bills are making their way through the state Legislature to give cities a menu of options when it comes to development, based on current policy.

One approach that already exists is infrastructure financing districts, but they are underutilized.

This tool allows cities and counties to issue bonds to fund public works projects, including highways, transit, water systems, sewer projects, flood control, child care facilities, libraries, parks and solid waste facilities.

To repay the bonds, IFDs divert a portion of property tax revenues from other levels of government (except school districts) for a period of up to 30 years. These other jurisdictions have to opt-in to the IFD, otherwise their tax revenue would not be diverted for it.

The benefit of IFDs is that expanded public structures boost the value of nearby property, thereby increasing property tax revenues.

One criticism of RDAs is that cities should not have so much power in determining where and how the redevelopment money is spent. But there are multiple layers of transparency built into IFDs.

When forming an IFD, a city council or county board of supervisors must develop an infrastructure plan, send copies to property owners, consult neighboring local governments and hold public hearings. The governing body must also prove that the public facilities will provide significant benefit to an area larger than the IFD.

Since IFDs were authorized in 1990, only a few have been established. But Senate Bill 33 (Lois Wolk, D- Davis) would eliminate the current two-thirds voter approval needed to form an IFD, allowing for creation through a resolution passed by a legislative body of a city or county.

Without redevelopment agencies, IFDs are a valuable alternative and the Valley Industry and Commerce Association supports SB 33 to jumpstart necessary public works projects.

Another measure builds on the concept of IFDs and creates a new program – infrastructure and revitalization financing districts.

Assembly Bill 243 (Roger Dickinson, D-Sacramento) would create these IRFDs and require only a 55 percent voter approval.

IRFDs could be used to finance a broader range of projects and facilities than IFDs: land and property purchases for development purposes and site-related improvements; acquisition, construction or repair of housing and commercial and industrial structures; and projects that implement the provisions of a sustainable communities strategy.

VICA supports creating IRFDs because they provide local governments with tools and resources for public infrastructure, affordable housing and job creation – benefits of RDAs that cities now lack.

Cities with blighted and underdeveloped areas have nowhere to turn since RDAs were dissolved.

Through key legislation like SB 33 and AB 243, we can hope to see these neighborhoods built up and see people put back to work.

The Valley Industry and Commerce Association (VICA) is a business advocacy organization based in Sherman Oaks that represents employers throughout the Los Angeles County region at the local, state and federal levels of government.


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