What many deemed impossible has become reality. As of yesterday California’s redevelopment agencies are no more. Legislation demanding an extension of their Supreme Court-ordered dissolution to April 15 was not passed, and the agencies appear to be out of options. Governor Brown yesterday formed a three-member board responsible for their termination, and agencies have already begun laying off employees.
Founded in 1945, the agencies were designed to “enable local governments to revitalize deteriorated and blighted areas,” according to the California Redevelopment Association, through encouraging private sector investment that otherwise would never occur. Their most noted incentive tool was tax increment financing, a method of using projected gains in taxes to subsidize improvements.
Over the years CRA-supported success stories included the redevelopment of downtown LA and Hollywood, the re-emergence of Culver City’s downtown and the turnarounds of Old Pasadena, San Diego’s Gaslamp Quarter, Mission Bay in San Francisco and Bay Street in Emeryville.
"We haven’t got many tools like this to fix complex city problems," said Frank Fuller, a principal at San Francisco firm Field Paol, who praised redevelopment's ability to help developers take risk in challenging urban areas.
These achievements, of course, were partnered with allegations of corruption, inefficiency, misuse of eminent domain and waste in times of economic hardship. Many in Los Angeles never forgave the Los Angeles CRA for helping to gut the residential neighborhoods of Bunker HIll and Chavez Ravine in the 1950s and1960s to build a new downtown center and a new baseball stadium. Others accused the agencies of handing out "corporate welfare" to undeserving developers.
Discussing the agencies prior to their dissolution, Governor Brown’s spokesman Evan Westrup told AN, “now is not the time to be subsidizing private developers while our public services are being bulldozed.”
Kevin Oliver/Flickr and Loren Javier /Flickr
“It’s a very expensive program with some incredible success stories, but with a huge number of unsuccessful stories,” said Gabriel Metcalf, director of SPUR (San Francisco Planning and Urban Research Association), in an interview last year with AN. Metcalf noted that often redevelopment payouts failed to achieve desired results due to poor targeting and lack of oversight. (Fuller added that agencies had begun funding projects that they were never intended to, like stadiums and big box stores.) Still Metcalf said that redevelopment was vital for directing projects in dense urban areas—as opposed to encouraging sprawl—and helping rebuild once-crippled inner cities.
According to California Redevelopment Association Interim Director Jim Kennedy, redevelopment has generated over $5 billion a year in revenue flow and about 300,000 jobs a year through its investments. Sixty percent of those jobs have been in construction, and about 40 percent in related fields including, of course, urban planning and architecture. Kennedy added that every $1 in redevelopment spending has generated $13 in total economic services each year, “so you’re talking $35 to $40 billion a year disappearing from the California economy on an annual basis.”
He also pointed out the loss of hundreds of important projects, like stadiums, infrastructure, parks and affordable housing, to name just a few. There were about 400 redevelopment agencies in the state, all pushing for architecture and urban development. Architects, planners and developers across the state worry that their work will now dry up, and as of now there seems to be little to assuage that fear.
“There are an awful lot of projects that aren't going to go forward because of this," said Field Paoli's Fuller. He notes that his firm's San Bruno Gateway, a dramatic city entryway located adjacent to the local train station, will likely be severely scaled down due to lack of redevelopment support.
The agencies' dissolution came through a drawn out process. After years of taking money from the agencies to help fill its budget shortfalls, the state went even further this year as Governor Brown proposed abandoning the agencies altogether in his 2011-2012 state budget. The associated legislation, ABX1 26, was tempered by a partner bill, ABX1 27, which allowed agencies to remain in operation through payments to their local municipalities (redevelopment proponents labeled this a “ransom payment”). But the CRA challenged the ruling, sending it to the California Supreme Court, which last month upheld ABX1 26, the “elimination” bill, but struck down ABX1 27, which would have kept the agencies alive.
Kennedy stresses that this in not the end of redevelopment. It will, he said, re-emerge in a new form (with a new name). In fact, the association is already discussing suggestions with members of the legislature.
But he acknowledges that, “in the best of circumstances it’s going to be a downsized tool.”
With that tool’s demise, said John Kaliski, principal at LA firm Urban Studio, “there will be a debate, and the debate is going to be about what is the appropriate economic development tool for cities.” He added: "Maybe development patterns can be manipulated in other ways than real estate finance?”