A proposal by Gov. Jerry Brown to abolish redevelopment agencies in California can have serious ramifications for cities economic future, say municipal leaders throughout the state, including Culver City.

Culver City Chief Financial Officer Jeff Muir said the consequences of the governor’s proposal could put a number of the city’s development projects in jeopardy.

“The city’s short- and long-term growth would absolutely be affected as the funding source for many of the projects that have already been talked about and are in process would disappear,” Muir said. “Long term, we’d lose millions in property taxes that were coming back to us locally, and the ability to put that towards meaningful public improvements, investments in parking, development agreements, etc.”

Brown’s proposal includes lowering the tax approval rate for economic development activities, and Muir said because that would necessitate voter approval, that could cause an unintended domino effect on how projects are funded.

“Lowering the tax approval rate would have to be approved by the voters, and then in the future any specific effort towards additional local funding for such projects would also have to be approved by the voters,” the CFO noted. “We still have a lot of questions about how this would work as well.”

The governor’s office says his plan would save taxpayers $1.7 billion and would redirect funds back to local school districts and counties.

Culver City officials called a last-minute special meeting for Saturday, Jan. 15 to discuss publicly the possible ramifications of the potential loss of its redevelopment agency. The city council and the redevelopment agency took action on four items that they believe will safeguard – to some extent – current development projects.

The actions included cooperation agreements between the city and the agency to fund affordable housing and public infrastructure improvements. According to the staff report, this enabled the agency to secure funding for the city to pay for a variety of public infrastructure needs.

City leaders also transferred the Cardiff parking structure downtown to the agency through a purchase agreement in the amount of $14 million.

Los Angeles redevelopment authorities took similar measures a day earlier by moving approximately $930 million for specific projects to the city, ostensibly to prevent the state from taking it away.

Brown’s office said the governor hoped that Los Angeles and others cities were not attempting to “squirrel money away for the indefinite future, when our schools, police and firefighters are in need of this funding.”

Councilman Andrew Weissman of Culver City said it was imperative that city leaders took action sooner rather than later to protect ongoing infrastructure needs, as well as pending development projects. “It would have been the height of irresponsibility to sit back and do nothing when the governor is proposing to take away redevelopment agencies,” Weissman told the News.

Officials in neighboring cities are also concerned about the governor’s proposal.

“Redevelopment is California's primary engine for supporting jobs, reinforcing the economy, funding affordable housing and building infrastructure,” Santa Monica City Manager Rod Gould said. “With an unemployment rate of more than 12%, a massive infrastructure deficit and state policies promoting development, California needs redevelopment more than ever to create a stronger and greener tomorrow.”

A high-ranking California Redevelopment Agency Association blasted Brown’s budget recommendation. “This budget proposal to eliminate redevelopment is more smoke and mirrors that will bring little financial gain for the state but will cause widespread and significant pain in communities throughout California,” Executive Director John Shirley asserted in a statement. “It is another gimmick that will likely result in extensive litigation.”

Brown’s proposal comes eight months after a judge upheld an earlier ruling directing California's redevelopment agencies to give more than $2 billion in tax increments to schools.

Not everyone has taken issue with Brown’s plan for redevelopment agencies. “The governor’s proposal warrants a serious, thoughtful discussion,” said a spokesman from state Treasurer Bill Lockyer’s office. “Let’s have that adult conversation, not needless provocative acts of gamesmanship.”

Donald Barr, who has developed projects in Culver City for more than 20 years, has a different opinion of redevelopment agencies and their importance. “I think the city would be greatly helped if the governor went ahead with his plan,” he asserted.

Barr and other developers have complained about the length of time that it takes to get a project off the ground in Culver City, as well as what they say are exorbitant fees. “By the time that you get everything approved, most projects either don’t fit or are overcapitalized,” he said.

There is also uncertainty about how Brown’s recommendation will leave municipalities to deal with their low- to moderate-income mandates. “We also have significant questions about how any local agency can reasonably be expected to meet affordable housing requirements in the future if the source of funding is gone,” Muir said.

A report by the state Office of Oversight and Outcomes found that Culver City had created only four units over a 13-year period, despite having $22 million on hand, according to the report.

The Culver City Redevelopment Agency’s low- to moderate-income housing fund took in nearly $5 million in property tax money, the highest of any of the 12 agencies selected at random by the oversight office between 1995 and 2008, and held a total of $22.1 million. It did, however, report the substantial rehabilitation of 31 other units and the agency acquired the covenants of 12 housing units that are set aside for low- to moderate-income tenants.

“Given the amount of money at its command, the Culver City Redevelopment Agency has done relatively little to create new spaces for low- to moderate-income people to live,” the report states.

Asked if he believed whether cities could become more reliant on only developers who can self-finance projects, Muir responded, “If we lose the ability to receive tax increment, then only those projects that private developers are willing to finance move forward.”

Weissman thinks many residents are unaware of how redevelopment has transformed Culver City and other municipalities like Pasadena and Long Beach. “I don’t know that there is an overall appreciation in people’s minds, especially because here in Culver City, the same members of the city council also make up the redevelopment agency,” he noted. “But I think anyone with an open and reasonable mind can look across the landscape and see that redevelopment has been beneficial to Culver City.”

Muir pointed out that some of the city’s economic engines might not exist without redevelopment funding. “One of the reasons redevelopment was created is that there are often investments necessary to begin revitalization that the private sector will not make based on no, or an unacceptable level of, return on investment,” the CFO said. “If not for redevelopment and the investment in parking and other improvements, downtown Culver City would likely not exist as it does today, and the Westfield [mall] improvements are also very unlikely to have occurred without the agency.”

Because the proposal could face legal and political hurdles, the future of redevelopment agencies is unclear.

“There are still many questions,” Muir concluded.