City leaders not fazed by Brown's plan

DOWNEY - Gov. Jerry Brown's proposal to do away with redevelopment agencies, as part of his proposed budget which he unveiled last week, has entrenched parties up in arms but it doesn't scare Downey officials at all.According to Mayor Luis Marquez, Downey's two project areas administered by the Community Development Commission (aka the Downey City Council), comprising a) the Firestone Boulevard corridor running east to west of city limits, including the downtown core area, and b) the Woodruff Avenue commercial/industrial area comprising 168 acres from Stewart & Gray Road south to just north of Imperial Highway, has a budget totaling only $4.5 million. This compares with cities like Paramount, Glendale, Long Beach and Cerritos which are "heavily dependent on redevelopment revenue" in luring and retaining business investment to the designated areas. In fact, it's not unusual for a city such as Cerritos, Marquez said, to declare practically the whole city as a redevelopment area. Indeed, in a statement attributed to community development manager Brian Saeki, Cerritos in one fiscal year enjoyed redevelopment funds referred to as tax increments amounting to $32 million (and responsible, it can be deduced, for the city's projects such as its huge auto center). These are monies representing the increase in assessed property values above a base year. A further reason why Downey's Community Development Commission gets by with its modest FY2010-11 $4.5 million budget to fight blight, upgrade infrastructure, build affordable housing, promote job creation and otherwise spend on projects and programs designed to spur business investment and economic growth in the two areas, adds assistant city manager Gilbert Livas, can be traced to Downey's genes. "Historically, Downey has had no appetite for redevelopment. The word, usually associated with blight, carries a stigma, affecting property values in the area. There was also always the threat of eminent domain, and the idea turned people off," he said. "Besides, Downey hasn't really been afflicted with too much blight. There are more single-family homes here, residents are more aware of aesthetics, property values are higher here, and therefore, these translate into higher assessments." Bond payments on the Firestone Boulevard project area, said Livas, are about to end in one or two years. Servicing the debt on the Woodruff Avenue project area will take several more years. City staff has been instructed to study possible scenarios if redevelopment agencies are abolished. Eminent domain is hardly a consideration nowadays. Meanwhile, new businesses that have been attracted to the city and benefited from local redevelopment funding include Porto's Bakery, Bob's Big Boy, Champion Dodge, etc. They of course boost Downey's tax base. Brown's proposal includes filling a budget gap of $25.4 billion through a combination of cuts on health care, social services and higher education spending amounting to $12.5 billion, and revenues of $12 billion if enough lawmakers and eventually the voters will be willing to approve another 5-year extension of soon-to-expire (this June) temporary income, sales and vehicle taxes. If people are willing to "share the pain," Brown says he'll be able to plug the $25.4 budget hole in 18 months. But initial indications are that elimination of redevelopment agencies and/or extending the extra taxes on income, sales and vehicle fees will be a particularly hard sell. Assuming his proposal wins approval, the re-directed redevelopment funds of $1.7 billion would go to counties, school districts and the state. Joining the strident backlash to reject Brown's proposal for the elimination of redevelopment agencies is Councilman Mario Guerra who also serves as chair of the California Contract Cities Association's (CCCA) legislative committee. Present in Sacramento when Brown delivered his speech last Monday, Guerra promptly fired off a letter to the governor emphasizing CCCA's main themes of job creation, investment of local dollars and the strengthening of local economies as the main benefits of local redevelopment agencies. Among Guerra's arguments, which shed further light on the value of redevelopment: "In these difficult times, the governor's proposal to eliminate or cut redevelopment is short-sighted public policy that will damage our economy and bring little budget relief to the state. The proposal: *Will not provide expected budget relief to the state or local governments after bond issues and contractual obligations are repaid; •Will destroy billions of dollars in local economic activity and hundreds of thousands of jobs; •Will kill the state's leading program to provide affordable housing; and •Will harm our efforts to grow responsibly by focusing on urban and infill development." He further writes: "Redevelopment agencies issue bonds to finance redevelopment activities, which must be repaid with interest. Under the federal and state constitutions, these contractual obligations must be met before revenues are made available to any other entities or purposes. Agencies currently hold over $20 billion in bonded indebtedness. "Redevelopment contributes over $40 billion annually to California's economy in the generation of goods and services, including increasing the state's construction sector output by about $19 billion. "Redevelopment is the second largest funder of affordable homes in California after the federal government. Over 98,000 units of affordable housing have been constructed or rehabilitated since 1993. Twenty percent of property tax revenues generated from redevelopment activities must be spent on affordable housing. "This proposal runs completely contrary to the governor and legislature's stated goals of realigning state services to provide more responsibility and funding locally. "Redevelopment funds are already locally-generated property tax dollars (agencies do not receive state funding) directed toward community projects and programs directed by locally-elected officials with input from citizens. The proposal wipes out the only tool local governments have to drive economic growth, build up tax revenues, and grow sustainably." Guerra's arguments are echoed by a cacophony of voices up and down the state opposing Brown's proposal. As can be expected, much still remains to be done and resolved before a compromise on the state budget involving all parties concerned can be reached. As usual, as to what happens next, we'll just have to wait and see.

********** Published: January 13, 2011 - Volume 9 - Issue 39