Monday, March 19, 2012

“We Had the Funeral, Now It’s Time to Move On” – Concluded

In my last post, I began reporting about a recent Urban Land Institute (ULI) program on the dissolution of California redevelopment and the need for a new program to replace it. In this post, I’ll conclude by summarizing the thoughts of the speakers on the form that the redevelopment replacement might take. The speakers were Darrell Steinberg, President pro tem of the State Senate, John Shirey, Sacramento City Manager, Bill Fulton of Smart Growth America, and Meea Kang of Domus Development, who provided the quote that is the title.

Fulton observed that redevelopment happens elsewhere without the California model, so developing a new model isn’t impossible. However, he noted that a restoration of redevelopment will require resolution of both constitution and budget issues. Shirey stated that it might be a challenge to get Governor Brown’s buy-off on any new approach.

Fulton remarked that redevelopment question contains two elements, the loss of tax increment financing and disposition of the assets that have been accumulated by the now dissolved redevelopment agencies. He believes that the two should be considered separately. On tax increment financing, he expects the Legislature to propose a new approach and Governor Brown to likely agree as long as no state funds were required. He also observed that taxes other than property taxes, such as sales or transient occupancy taxes, could be used as a basis for tax increment financing. He noted that business-to-business sales taxes are far are more important than often understood and might provide another interesting opportunity. Steinberg supported an update to property-tax increment financing, perhaps with a new base year.

On current redevelopment assets, Fulton feared that an immediate forced sale of the assets, which may be mandated to help balance the state budget, could reduce the sale proceeds. Instead, he proposed that the state allow the assets to be used as an endowment for future redevelopment.

Steinberg commented that his SB 1151 would do what Fulton was proposing. It would allow redevelopment assets to be preserved as a trust. He further suggested that the Public Employees’ Retirement System (PERS) might be willing to invest in infrastructure, augmenting the opportunity provided by the trust.

Fulton proposed that any renewed redevelopment approach not use “blight” as a criterion. He thought that blight had a “squishy” definition which was prone to uses not originally intended. He suggested that new redevelopment should instead focus on the uses at which redevelopment had excelled, such as infill and transit-oriented development. Steinberg later noted that these were the same types of land-uses which ULI often espoused. He thought that Governor Brown would be most likely to support a return of redevelopment if it focused on these types of projects. He also observed that the priority should be building healthy communities.

Fulton commented that systemic changes were needed to assist any new approach to redevelopment. He noted that California is moving increasingly toward urban development, but the planning system remains based on suburban development. He argued that we need a new system, one that includes more acknowledgement of urban projects and redevelopment. (As the coauthor of the respected “Guide to California Planning”, his comments had weight.) He also suggested that urban specific plans should become more important.

On a related topic, Kang suggested a need to reduce non-market barriers, such as CEQA and parking. Fulton observed that the prompt and expansive implementation of SB 226, which reduces the CEQA barriers for infill development, could provide multiple benefits.

Fulton suggested the possibility that future redevelopment bonds be issued under a state-imposed cap, with the state providing general oversight. When Steinberg later described his SB 1156, it appeared to be consistent with the concept. The bill would authorize a Joint Power Authority to oversee new redevelopment projects and to avoid competition between agencies.

In response to a question, Fulton acknowledged that other states had redevelopment systems that might be used as models for California. However, he noted that property tax abatement is a frequently-used tool in other states, but is unconstitutional in California.

In response to a question on the use of eminent domain, Fulton noted that the use of eminent domain was already in decline before the recent backlash against it. He suggested that it might be better to focus on the assembly of large parcels without eminent domain, although eminent domain should remain an available tool.

To provide an immediate boost to pending projects that would have formerly fallen under redevelopment, Fulton offered several thoughts. He suggested that the state expedite the distribution of funds that were previously awarded under Propositions 1-C and 84. He also proposed that cities consider offering density bonuses in exchange for infrastructure funding.

Lastly, Steinberg suggested that his SB 654 for affordable housing could mitigate some effects of the loss of redevelopment. However, he won’t push for passage until after the May revenue estimates are released. The estimates may require revisions to the bill.

Overall, it was a well-assembled program that provided an insightful road map to the pending decisions.

As always, your questions or comments will be appreciated. Please comment below or email me. And thanks for reading. - Dave Alden (

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