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Comeback Eyed for Pieces of Redevelopment

By   /   March 5, 2014  /   Comments Off

…… local governments could take advantage of the expanded IFDs only “on the conclusion of any outstanding legal issues between the successor agency, the city or county that created the (redevelopment agency) and the state.” Other requirements include audits by the state controller and approvals from the Finance Department.

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carrotstickTwo years after Gov. Jerry Brown and the Legislature dismantled California’s $5 billion-a-year redevelopment program, Brown wants to bring some elements back — but he’s offering less money, a different name and a change in local voters’ approval.

 

The crux of Brown’s plan is to expand the reach of the rarely-used, little-known Infrastructure Finance Districts. The districts, or IFDs, have taxing authority and are created with voter approval. They function on property tax dollars and focus on highways, transit and sewer projects, libraries, parks and child care centers.

Brown wants to add to that list urban “infill” development, affordable housing, development to encourage use of public transportation, former military bases and what his office calls “necessary consumer services.”

The administration’s plan is the culmination of the furious politicking that has wracked the Capitol since Brown first proposed in 2011 to abolish redevelopment agencies to help solve state budget woes and free up funds for other cash-strapped public needs.

Many of the additions overlap with projects once carried out by redevelopment agencies, first authorized by the state after World War II to combat urban decay and blight.

The notion of using IFDs has some support in the Legislature, where a number of lawmakers have authored IFD-related bills.

“It does make sense,” said Sen. Lois Wolk, D-Davis, who authored a major IFD bill, SB 33. “It gives local government a financing tool for public projects …  and the Infrastructure Finance District does not take money from the schools, or from any other agency without its agreement.”

The administration’s plan is the culmination of the furious politicking that has wracked the Capitol since Brown first proposed in 2011 to abolish redevelopment agencies to help solve state budget woes and free up funds for other cash-strapped public needs.

Some 400 agencies across the state were formally eliminated in early 2012, over the objections of many cities and counties, where officials argued that they would be left without a vital financing tool for much needed projects.

Scores of municipalities sued the state over the move.

The Finance Department — the state office that actually writes the governor’s budgets — posted the governor’s proposal Feb. 21 in the form of a “trailer bill,” a measure tied to the budget that takes effect only if the main budget bill is approved. Typically, a budget may carry a dozen trailer bills that reflect agreements reached to win passage of the main bill.

The Finance Department in its January budget proposal for the 2014-15 fiscal year said the governor’s “goal is to maintain the IFD focus on projects which have tangible quality-of-life benefits for the residents of the IFD project area.”

In raw dollars, the IFDs represent a smaller price tag, although it’s too early to say how small.

Unlike redevelopment agencies, local entities affected by IFD projects have the option of participating or not, “ensuring the impacted local agencies have a voice in whether they will contribute their revenue to those projects and, if so, how their revenues will be used,” the administration said. Cities and counties are the most likely entities to create IFDs.

Schools are specifically barred from participation in IFDs. That prohibition is crucial, because under a state law approved by voters in 1988, school funding is guaranteed by the state and the schools must be kept financially whole. The linkage between school funds and redevelopment played a role in Brown’s move to eliminate the redevelopment agencies.

“I think it’s a start. It’s not going to have a strong impact, at least in the beginning. But it doesn’t hurt,” said Cindy Trobitz-Thomas, former redevelopment and housing director in Eureka. During her stint there, she helped coordinate a $60 million waterfront restoration and improvement project.

“A lot of redevelopment activities fell under the radar,” she added. “It was really difficult to differentiate what was going on. This is really a claim about transparency. When you establish an IFD, issue debt and collect taxes, it is a much more open process in terms of what’s going on with tax dollars.”

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