The End of Redevelopment?

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citycatWill Davis’ Pass-Through Agreement Now Be At Risk?

On Monday, the California Redevelopment Association said that agencies across the state will begin transferring the funds that the state raided last year after a California appellate court on Friday denied a request to stay a transaction that would use $1.7 billion of those funds for local schools.  That means that Davis will have to pay $3.2 million from its redevelopment coffers.

In Davis, the redevelopment area, a funding mechanism ostensibly put into play to eliminate blight in the downtown Core, Olive Drive and South Davis, encompasses around a quarter of the city’s property tax revenue.  In recent years the city council has looked to the redevelopment agency to fund a variety of projects in the reuse of the Historic City Hall and what has become Bistro 33 and now the expansion of the Varsity Theater.  The council who also sit as board members of the redevelopment agency were hoping to use redevelopment money for a number of economic redevelopment projects including a downtown parking center on E and F between 3rd and 4th.

However, few might recognize that one of the more vital functions is money that goes from the city to the county in the form of the pass-through agreement where the city bypasses $2 million on an annual basis to the county’s general fund in order to prevent the county from attempting to develop on Davis’ borders.  Without the redevelopment agency, it would be difficult for the city of Davis to do that.  And the county might look toward city-edge development as a means to produce one-time monies.  Even before this current raid, the county had talked at one point about the amount they received from the city as being insufficient.

During last week’s city council meeting, Paul Navazio suggested that this kind of decision, if allowed to stand by higher courts, could mean the end of redevelopment in California.  Without the redevelopment agency, the city would find it difficult to finance the kind of core area projects that they have been discussing for several years.

The Contra Costa Times in an editorial Monday called the decision “a damaging roadblock… placed on California’s path toward responsible budgeting and economic recovery.”

The editorial goes on to point out:

“A year ago, Connelly ruled against a similar raid on local redevelopment funds. But this time around, lawmakers mandated that the money would have to help students within the redevelopment agency boundaries.

This change was sufficient to win Connelly’s approval. He wrote that the state could use the money to help support schools located within redevelopment agency boundaries because it served a public purpose.

Unfortunately, the ruling is so broad that it undermines the whole concept of redevelopment agencies. If the decision stands, redevelopment agencies no longer would be able to rely on extra incremental property taxes to finance public works projects.

Also, many redevelopment districts in the state do not have schools or many students within their boundaries. One wonders how redevelopment funds in those districts can be fairly distributed to education.”

According to their view, redevelopment is part of the engine out of recession by providing money for projects that will ultimately hire thousands for construction, one of the industries hardest hit by the current recession. 

“However, raiding redevelopment funds also undermines the governor’s stated goal of creating jobs in California to help revive the state’s economy.

Taking money away from a host of projects that are already under way or in the final planning stages is shortsighted and a poor way to try to balance a state budget.

Redevelopment stimulates billions of dollars in economic activity and supports thousands of jobs, mostly in construction, one of the hardest-hit areas during the current recession.”

The Contra Costa times believes that the likely result will be the loss of thousands of jobs along with the income and tax revenue that they would have produced not only for local entities but the state itself.

On Friday, the candidates for Davis City Council, two of whom may have to deal with a post-redevelopment world weighed in on the issue and how would the city have to make up for the loss of redevelopment money or the entire redevelopment agency.

Jon Li, not one to mince words, declared flat out that redevelopment as an idea is about to disappear.

He suggested we need to do a complete reassessment about what the government should be doing locally in the city.  “We lost a department on Tuesday night.  We’re changing radically as a city and that just happened at the announcement of the city manager.  I’m sure the discussion has happened somewhere.  But I don’t think it’s happening in a way that most people that care about how the city works understand that we’re a completely different place than we were a week ago.”  He concluded, “there are blocks of money that we’ve been counting on that are going to disappear.”

However, Joe Krovoza was less pessimistic arguing that this was hardly the first time that the state had attempted to get redevelopment funds and each time in the past the courts have denied them the opportunity.  He thinks the Superior Court decision may not stand since he does not see the reasoning why it would be okay this time, but not before.  “It’s not a done deal yet,” he said.

Rochelle Swanson was also a bit more optimistic looking toward appeals of the decision as well as a November ballot measure to protect local funding sources.  Ms. Swanson said that the California Redevelopment Agency is trying to do a stay on the decision while they appeal the case.  The other good news she said, is the ballot proposition in November would protect local funds.  Locally she said, “I think it’s important that projects that we have in the works, now that we’re looking at using redevelopment money, even if that does get stayed and we end up going through waiting for an appeal, we need to be cautious that we’re not spending that money even if it’s sitting in the coffers.”

Sydney Vergis talked about the impact both on business and the pass-through agreement.  “Well the state swooping in and taking three million dollars from our redevelopment money is quite serious,” she said.  “Redevelopment money is meant to be spent to keep local businesses in business, to help preserve local jobs, to help to provide for affordable housing options.” 

She pointed out our pass through agreement, the money we give the county not to develop on Davis’ borders, comes from the redevelopment fund as well.  She cited Paul Navazio as suggesting that this might end redevelopment as we know it.  She called this a serious issue and recent issue, “For that reason I’m really focusing on trying to figure out what remains of our redevelopment agency, but how can we help now through policy, through land use policy, really help support our downtown businesses and neighborhood shopping centers.“

Is this really the end of redevelopment?  That is hard to say.  What we do know is that the state is now beginning to transfer its fiscal burden from the state level to local governments that have been hit hardest by the current economic downturn and many of whom were struggling even before.  Going after redevelopment money is self-defeating as it was the engine of renewal in California, of rebuilding urban blight in the core of cities and putting people to work.

In Davis, it’s nearly a quarter of our property tax base and the funding source that grants us autonomy from county encroachment on our borders.

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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14 thoughts on “The End of Redevelopment?”

  1. SODA

    Interesting that Sourh Davis is included. What has been done there with redevelopment monies?
    If these monies go away are there staff layoffs to follow?

  2. David M. Greenwald

    South Davis being the in the redevelopment area is an interesting thing and it means that the general fund is not getting money from South Davis, another interesting thing. I’d be interested in Sue’s take on that, I had a long conversation with Paul Navazio on it a few months ago.

    As far as I know, there is not staff hired with redevelopment money, Sue again could probably clarify on it. Redevelopment is complicated and I’m not expert on it.

  3. SODA

    I live in South Davis and many of us think we have been ‘given’ the short end in terms of many fast food outlets the car dealerships the first big box, etc,not much quaint or stylish design as with other areas of town. And certainly the ever changing restaurant on Chiles has been a blight since the last restaurant bailed tho recently there has been slow progress.
    It seems that Katherine Hess and Ken Hiatt have reported on redevelopment projects so assumed there was staff.
    DPD did you ask your question about number of planners at budget workshop?

  4. Ryan Kelly

    The south side of the freeway has always had the fast food restaurants and car dealerships. They were there before the houses were built. The “big box” store is in East Davis, I believe. The hotels and restaurants around the Richards Blvd exit is reflected on both sides of the highway. South Davis doesn’t look any different than far West Davis (along Hwy 113.) The attitude that South Davis residents have been “given the short end” must stop.

  5. SODA

    Office max in S Davis. Only one hotel on town side of freeway and it is stylish. We have at least two high rise chains. Not complaining. Love S Davis just wondering what redevel monies have been used.

  6. Ishmael

    “The attitude that South Davis residents have been “given the short end” must stop?”

    Why? It’s a true statement. A significant proportion of the development impact fees were exported from South Davis to fund projects elsewhere in the city.

    As things currently stand, (1) the South Davis Community pool has still not been built and (2) the Putah Creek bikepath remains incomplete.

  7. E Roberts Musser

    I find it ironic that the very same people who seemed so concerned about the welfare of Davis schools, are now upset the state is going to take RDA funding back – to put towards schools/education. Is the fear it won’t trickle down to Davis schools specifically, or is it that schools are lower in priority to Redevelopment projects? I’m not quite understanding the logic of this. Please explain…

  8. David M. Greenwald

    It would be different if the city “chose” to send redevelopment to help the schools. It’s another matter when the state take it.

  9. E Roberts Musser

    DMG: “It would be different if the city “chose” to send redevelopment to help the schools. It’s another matter when the state take it.”

    Why is it “another matter”, if the redevelopment funding trickles down to help Davis schools?

  10. David M. Greenwald

    Because it falls out of local control. In your parlance, would you rather have the state tax you $100 to go to schools, or donate $100 yourself to go to schools?

  11. E Roberts Musser

    DMG: “Because it falls out of local control. In your parlance, would you rather have the state tax you $100 to go to schools, or donate $100 yourself to go to schools?”

    As long as it arrived to assist Davis schools, I don’t really care how it gets there.

    The better argument is that if redevelopment funds are raided to “assist education”, “assisting education” could mean just about anything. More than likely it would result in schools districts in LA getting most of the money, while small school districts that are better off (like Davis) will get nothing. It also lets the state determine how the money will be spent – not necessarily on saving teachers for instance. I would even hazard a guess that a lot of the money will be swallowed up by the state education bureaucracy and will never trickle down to the local school district level. But this is all speculation – I’d want to know more specifics before dismissing the Governor’s proposal out of hand.

  12. David M. Greenwald

    That’s part of the idea that you allow local governments keep the money that’s lawfully there’s. If they choose to send it to schools, great. If they choose to build a new business that employees 50 people, that is also great. Destroying redevelopment is not going to fix the schools in the long term, but it will cost of us jobs, remove a tool to get rid of blight and with it crime and poverty in the core of cities, and in the long run that is not a good trade off. A lot of cities have revitalized because we actually put money into redevelopment rather than allowing the infrastructure in the core of cities to become dilapidated and wait for private capital ventures to save us.

  13. E Roberts Musser

    DGM: “That’s part of the idea that you allow local governments keep the money that’s lawfully there’s. If they choose to send it to schools, great. If they choose to build a new business that employees 50 people, that is also great. Destroying redevelopment is not going to fix the schools in the long term, but it will cost of us jobs, remove a tool to get rid of blight and with it crime and poverty in the core of cities, and in the long run that is not a good trade off. A lot of cities have revitalized because we actually put money into redevelopment rather than allowing the infrastructure in the core of cities to become dilapidated and wait for private capital ventures to save us.”

    I gather from your statement that you concede the possibility that other priorities may take precedence over schools? That seems to be what you are saying. I’m not sure how I feel about the Governor’s proposal. These are desperate times, that are probably going to get worse before they get better. Schools are in a real crisis, with a huge number of teacher layoffs looming – which is terrible for the entire state economy. My biggest problem with the Governor’s proposal is that it seems short on specifics, and the money will not trickle down locally as “sort of” promised. And of course the other problem is that once done, it is hard to have it “undone”.

  14. David M. Greenwald

    No I just don’t think the ends justify the means. We have a process for a good reason and when that process becomes unilaterally usurped in an ad hoc fashion, the system breaks down. I’ve stated many times that from a policy standpoint, education is my top priority. But from a process standpoint, this is bad precedence.

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