Governor Brown's Redevelopment Plan
Fear of Governor Jerry Brown's plan to eliminate redevelopment agencies across the State to help balance the budget has resulted in a letter sent to the Governor from our city council and the issuance of a city-wide rebuke of the Governor's plan from City Manager Pat O'Keeffe. Emeryville, they remind us is unique in that virtually the entire city is in a redevelopment zone and any changes to redevelopment law brought from Sacramento will have profound effect on the city. While this is undoubtedly true, perhaps the change might not occur as City Hall says it will.
The City Manager has attempted to incite fear with his missive but Emeryville residents could benefit from a cogent appraisal of the Governor's plan with a different perspective. San Francisco Chronicle reporter Doug Kaplan offers a thoughtful alternative to the Emeryville City Hall wall of condemnation of Jerry Brown's plan. Here for your consideration, from Friday's Chronicle is Mr Kaplan's take on the Governor's redevelopment plan.
Re-Printed from the San Francisco Chronicle:
Why redevelopment subsidies must end
Friday, February 11, 2011
One of the most important elements of Gov. Jerry Brown's budget proposal - restructuring the state's $5.7 billion-a-year redevelopment program - is complicated in its details, but very simple in concept.
Imagine a wide valley covered by some 400 farms. Each of these farms draws its water from the same aquifer that was once abundant but now is about to run dry. The authorities have three choices: shut down the farms; regulate the amount of free water they draw; or start charging farmers for the water they use, under the assumption that farmers will waste less water if they have to pay for it.
The farms in this analogy are California's 390 local redevelopment agencies. The once-abundant, now depleted, aquifer is the state's general fund from which redevelopment agencies ultimately draw their "free water."
The first choice - shutting down the state's redevelopment program altogether - is a nonstarter. Even though redevelopment agencies have squandered billions of dollars over the decades subsidizing Walmarts, Home Depots, shopping centers and similar projects throughout California, many agencies have spent money on a number of worthwhile projects, such as building low-cost housing and rebuilding public infrastructure. Closure is not an option.
The second choice - regulating the amount of money redevelopment agencies take - makes sense, and has been done in recent years, but unfortunately is no longer possible following the passage of Proposition 22 last November.
That leaves option No. 3 - making redevelopment agencies "pay for the water they use" - which is what Gov. Brown has proposed. Under the governor's plan, local agencies could continue to do everything that redevelopment agencies have done in the past, but with their own money.
And if they wanted to borrow more than the $20 billion that redevelopment agencies currently owe, they could, but, like school districts that want to pass bonds to build schools, they'd first have to ask voters for approval.
The governor's proposal to make redevelopment agencies self-funding would reduce the state's projected budget deficit by about $1.7 billion, and because of the way state funding formulas work, schools would also receive a multibillion-dollar benefit over time.
Everybody wins, except, of course, the developers who receive redevelopment subsidies to build shopping centers, investment bankers who earn fees for issuing more than $1 billion of redevelopment bonds every year, land-use attorneys who help orchestrate the seizure of homes and businesses that stand in the way of redevelopment projects, and others who profit from the status quo. These interests are wealthy and well-connected, and they are fighting hard to keep their free water flowing.
The governor's proposal is sustainable; the status quo is not. It's that simple.
Imagine a wide valley covered by some 400 farms. Each of these farms draws its water from the same aquifer that was once abundant but now is about to run dry. The authorities have three choices: shut down the farms; regulate the amount of free water they draw; or start charging farmers for the water they use, under the assumption that farmers will waste less water if they have to pay for it.
The farms in this analogy are California's 390 local redevelopment agencies. The once-abundant, now depleted, aquifer is the state's general fund from which redevelopment agencies ultimately draw their "free water."
The first choice - shutting down the state's redevelopment program altogether - is a nonstarter. Even though redevelopment agencies have squandered billions of dollars over the decades subsidizing Walmarts, Home Depots, shopping centers and similar projects throughout California, many agencies have spent money on a number of worthwhile projects, such as building low-cost housing and rebuilding public infrastructure. Closure is not an option.
The second choice - regulating the amount of money redevelopment agencies take - makes sense, and has been done in recent years, but unfortunately is no longer possible following the passage of Proposition 22 last November.
That leaves option No. 3 - making redevelopment agencies "pay for the water they use" - which is what Gov. Brown has proposed. Under the governor's plan, local agencies could continue to do everything that redevelopment agencies have done in the past, but with their own money.
And if they wanted to borrow more than the $20 billion that redevelopment agencies currently owe, they could, but, like school districts that want to pass bonds to build schools, they'd first have to ask voters for approval.
The governor's proposal to make redevelopment agencies self-funding would reduce the state's projected budget deficit by about $1.7 billion, and because of the way state funding formulas work, schools would also receive a multibillion-dollar benefit over time.
Everybody wins, except, of course, the developers who receive redevelopment subsidies to build shopping centers, investment bankers who earn fees for issuing more than $1 billion of redevelopment bonds every year, land-use attorneys who help orchestrate the seizure of homes and businesses that stand in the way of redevelopment projects, and others who profit from the status quo. These interests are wealthy and well-connected, and they are fighting hard to keep their free water flowing.
The governor's proposal is sustainable; the status quo is not. It's that simple.
Doug Kaplan, a real estate developer and former school board trustee, lives in Aptos (Santa Cruz County).
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/02/10/EDGQ1HLI51.DTL#ixzz1Dhi644Jb
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