State Treasurer warns that redevelopment agencies are on the chopping block

State Treasurer Bill Lockyer (left) with Culver City Chamber of Commerce Chair Angela Gibson (center) and President Steven Rose (right). Submitted Photo

The likelihood of the state’s redevelopment agencies surviving past this summer is improbable, according to a high-ranking Sacramento lawmaker.

Speaking at a Culver City Chamber of Commerce event on March 3, state Treasurer Bill Lockyer gave his impressions on the budget reduction proposal by Gov. Jerry Brown, which includes abolishing redevelopment agencies throughout California.

“The redevelopment fight is over,” Lockyer told the audience.

The treasurer, one of the longest-serving lawmakers in Sacramento, was the featured speaker at the chamber event and discussed at length the state budget problems, as well as some of the poor fiscal choices that previous officeholders made, which have exacerbated the current financial crisis.

But his comments on redevelopment agencies drew most of the audience’s attention, which included city lawmakers and City Hall officials.

In January, Brown recommended eliminating the state’s 397 redevelopment agencies as a means of reallocating revenue back to local governments and school districts. According to Brown’s office, closing the agencies could free $1.7 billion that would become available for public safety and schools.

“The state can’t transfer redevelopment funds to schools,” Lockyer explained. “All the state can do legally is blow them up.

“That’s the alternative that was created by Proposition 22.”

Proposition 22, approved by California voters last November, prohibits state officials from taking revenue derived from locally imposed taxes, such as hotel, parcel, utility and sales taxes and local public transit and transportation funds.

“People realize that redevelopment has created jobs and encouraged economic growth in very important and significant ways,” Lockyer acknowledged. “Unfortunately, the academic research suggests that mostly it move jobs from one part of California to another part of California and that half of them don’t pay for themselves.”

The state legislative analyst’s office backs up the treasurer’s assertion. “In our view, the governor’s proposal merits consideration. The proposal places the responsibility to pay for local economic development activities with the level of government benefiting from these policies,” wrote Mark Whitaker, a state senior policy and fiscal analyst in a report on Feb. 8.

“The proposal also heightens local accountability for its economic development policies and provides local governments increased general purpose revenues. Finally, the proposal would make a significant contribution towards helping the state address its serious fiscal difficulties in 2011–12.”

Lockyer, who was also the California attorney general from 1998 until 2006 and served in the state Assembly and Senate, said many Sacramento lawmakers see funding education as an important task.

“K-12 is a higher priority than redevelopment agencies,” he said.

Lockyer said there was also evidence that redevelopment is a mixed bag. “I think that almost everyone will admit that there is good and bad, and there are great results, good projects and good job-creation efforts, and some that are indefensible that don’t make any sense,” he said.

The treasurer referenced a recommendation last month urging the use of redevelopment funds to move the World Series champion San Francisco Giants baseball team to Santa Clara – a move that could cost as much as $40 million. “Why is that a state obligation to pay for that?” he asked.

In Los Angeles, many have questioned redevelopment officials’ decision to subsidize billionaire Eli Broad’s art venture in downtown Los Angeles.

Opponents of abolishing redevelopment agencies point to areas of blight that have been rehabilitated, as well as the tax base they have created.

Lockyer said he had been asked about reforming redevelopment agencies, but he has his doubts. “As somebody who has been around in government longer than anyone else in Sacramento now, reform is a nice thing to think about, but it normally doesn’t work,” he said.

From a legal standpoint, the agencies cannot be reformed or altered, Lockyer said. “You can’t do it,” he asserted.

City Manager John Nachbar was unsure that Lockyer’s assertions on redevelopment had yet been decided. “We have to work our way through this,” he said.

City officials have taken action over the past six weeks in an attempt to safeguard certain redevelopment assets in case Brown’s plan to close redevelopment agencies becomes law.

“We’re doing all that we can,” Nachbar said.

In a joint session on Feb. 28, the city council and the redevelopment agency postponed taking action on a proposal to oppose the abolition of redevelopment agencies.

Culver City Chamber of Commerce President Steven Rose believes the elimination of redevelopment agencies will be detrimental to local governments. “How many tools for economic development will be left for local governments?” he asked.

Rose cited Westfield Culver City as a prime example of redevelopment as an economic engine and its ability to create locales that render other intrinsic community benefits.

“Fox Hills Mall (as Westfield was previously known) was a retail area,” the chamber president said. “Westfield’s Culver City is a retail destination.”

Opponents of Brown’s plan have indicated that they might sue the state if redevelopment agencies are dissolved, and Lockyer did not rule out the possibility of legal action if the governor’s proposal does become law.

“Will there be lawsuits? As a friend of mine used to say, ‘What makes more work for lawyers can’t be all bad,’” the former state attorney general quipped.

But the treasurer believes that the governor is on solid legal ground with his redevelopment proposal. “The Brown side wins this particular argument, in my view,” he said.

As far as the overall budget, Lockyer said state lawmakers are in a difficult position, in part because of the economic downturn and also due to past fiscal policies. “We have a continuing structural deficit that needs to be addressed,” he said. “We’re dealing with budget triage. They’re facing some tough choices, but the priorities are the correct ones, in my view.”

Lockyer reiterated that in his view, the fight to save redevelopment agencies from elimination was essentially over and feels that cities should consider contingency plans. “The attention needs to shift very quickly to what’s next,” he advised.