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Date: 21 Oct 2012
Time: 03:14:16 -0500
to lift all boats and the region arnoud the project area is expected to benefit. Like giving tax breaks to the wealthy is supposed to help the middle class.Spinners for the RDAs argue that redevelopment activities support 304,000 jobs annually, including 170,600 construction jobs; contribute more than $40 billion annually to California’s economy in the generation of goods and services; and generate more than $2 billion in state and local taxes in a typical year.Moreover, since the law requires 20 percent of the tax increment to be dedicated for low- and moderate-income housing, the RDAs argue that eliminating redevelopment will significantly undermine efforts to provide homes for those who otherwise cannot afford it.A close look at the numbers: But the most thorough and academically sound study of redevelopment we’re aware of, by Michael Dardia of the Public Policy Institute of California, found in 1998:“After correcting for local real estate trends, the author finds that redevelopment projects do not increase property values by enough to account for the tax-increment revenues they receive. Overall, the agencies stimulated enough growth to cover just above half of those tax revenues. The rest resulted from local trends and would have gone to other jurisdictions in the absence of redevelopment.”A study by the nonpartisan Legislative Analyst’s Office recently concluded as much and more.“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. That is, redevelopment may cause some geographic shifts in economic development, but does not increase the overall amount of economic activity in a region. (emphasis added)“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. We note that one study, commissioned by the California Redevelopment Association, vastly overstates the employment effects of redevelopment areas.“Redevelopment agencies receive over $5 billion of tax increment revenues annually. 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.“For example, a redevelopment agency might attract to a project area businesses that previously were located in other California cities, or that were planning to expand elsewhere in the region. In either of these cases, property taxes paid in the project area would increase, but there would be no change in statewide property tax revenues.“To the extent that a redevelopment agency receives property tax revenues without generating an overall increase in taxes paid in the state, the agency reduces revenues that otherwise would be available for local agencies to spend on nonredevelopment programs, including law enforcement, fire protection, road maintenance, libraries and parks.” (emphasis added)The bottom line: In other words, despite the good arguments that RDAs make about the enormously positive local impacts of redevelopment — San Jose’s downtown and its northern industrial area are excellent examples — the evidence suggests there’s a huge cost to the state (which has to back-fill funds that otherwise would have gone to schools) and little benefit or a substantial cost to counties and special districts.We’re not even getting to other issues, like the fact that the only “blight” a lot of redevelopment areas had before they were made projects was pear blight, and the fact that there’s virtually no oversight of how redevelopment funds are spent (and millions of dollars are spent outside the law’s intent to subsidize flagging city budgets and improve stable neighborhoods). That’s just piling on.Brown’s budget would ensure that RDAs will receive enough money to cover the debt service on bonds they have already issued (although the structure of the agencies that will make those payments still must be worked out).But in an era when California is faced with draconian cutbacks to higher education, schools, parks and public safety, the diversion of property taxes to redevelopment agencies is a luxury the state can no longer afford.