Demise of redevelopment agencies looms in the state of big challenges

There's nothing that could make residents of places like Washington, Oregon or Montana feel better about how their states are being run than to be plunked down for a few weeks in California and get an amusing and bemusing look at the dysfunctional workings of the nation's most populous state.

Everything about California is big, and that includes the massive budget deficit that has been the focus of governor-again Jerry Brown since he was sworn in a year ago as the literal political-comeback kid.

Now comes what may be the biggest challenge ever faced by local governments and economic-development entities in California. More than 400 redevelopment organizations around the Golden State are scheduled to go out of existence on Feb. 1 and some of their financial obligations will be absorbed into the general funds of local governments in those areas where the EDAs now exist.

Part of the predicted fallout will be that states like the aforementioned Northwest ones will be cranking up their California recruitment efforts looking to woo businesses away from a place where they don't seem to be wanted.

That would be an unfortunate misimpression about California because local communities and economic-development organizations across the state strive mightily to create jobs in their areas with innovative ideas and initiatives, despite the image the state policies have fostered.

Four of the largest redevelopment agencies in California are all in the job-hungry Coachella Valley. Those are La Quinta, Indian Wells, Rancho Mirage and Palm Desert - communities well known to Northwesterners who trek south to the desert each winter in search of sun.

Redevelopment agencies provide funding for road, sewer, lighting and affordable-housing projects across the state under a 65-year-old law that allowed a city or county to create a redevelopment area to address urban blight. RDAs receive related property-tax revenue increases, known as tax increments.

All this chaos came about because a legislature-approved plan conceived and proposed by Brown sought to coerce the RDAs to give up $1.7 billion in increased property-tax funds if they wanted to continue to exist. It was branded the "pay-ransom-or-die redevelopment system" by the California Redevelopment Association.

Part of the reason that the governor and legislature viewed the RDAs as a good place from which to divert revenue is that for all the good works done by the RDAs in creating opportunities for developers to invest in communities and transform downtrodden areas, examples of excess and abuse occurred.

To be sure, there have been blatant instances of excess on the part of some RDAs as eminent domain was sometimes used to seize private property that was then transferred to developers along with cash subsidies.

But even if sometimes developers seemed to get deals that smacked of favoritism,

many local officials and economic-development leaders would contend that the RDAs usually fulfilled their promise of revitalizing decaying communities and creating jobs.

Billions were invested over the decades to dramatically rebuild dilapidated downtowns, creating millions of jobs for Californians and hundreds of thousands of low-income housing units for growing numbers of homeless families.

Defenders of the value of redevelopment might logically suggest that killing RDAs is a little like saying examples of Medicare excess or fraud mean that Medicare should be abandoned.

During his first stint as California chief executive, Brown's mantra involved a focus on creating lower expectations for his state's citizens. In this new era of spending realities, he's being forced to impose lowered expectations rather than just urge their acceptance.

Part of his implementing lower expectations by fiat was to have local development entities settle for less and divert their funds to education, roads and fire departments as he sought to balance priorities while dealing with the $20 billion deficit.

The California Supreme Court, in a two-part decision, ruled late last year that the state had the right to kill the agencies. But it didn't have the constitutional right to condition their continued existence on their agreement to pay the state an annual fee based on their portion of property tax revenues.

So, unless there's an unlikely 11th-hour reprieve by the legislature, which even the governor's allies say he doesn't seem interested in achieving since it was the RDA organization that took him to court, the RDAs close up next week.

So what happens then? The real estate assets of the RDAs need to be sold off. But some obligations of longer-term nature that must be satisfied will become the obligation of city general funds.

That's likely to be the start of an extended period of financial uncertainty for cities and counties, as well as for the real estate market that will be flooded with several thousand commercial properties that will need to be sold at fire-sale prices.

George Skelton is a Los Angeles Times' political columnist who joined the newspaper the same year Brown was first elected in 1974 and thus has the unusual perspective of having covered both Jerry Browns.  

Skelton was a long-ago political-writing colleague at United Press International before he joined The Times so I emailed him last week to ask if we could visit about "the two Jerry Browns."

He followed up by writing a column on the subject following Brown's second State of the State address. Skelton recalled Brown's 1976 State of the State as "best remembered for one depressing, if prophetic, line: 'We are entering an era of limits.'

The state's current situation is clearly an immersion in an era of limits.

The now-73 year old Brown, during his 1974-82 tenure, was tagged as "Governor Moonbeam" for proposing that the state develop its own communications satellite.

Skelton says the old "Gov. Moonbeam" still exists. And Brown certainly proved that's true when, despite the financial travails of his state, he made it clear that reduced expectations don't apply to his unwavering support for a $100 billion bullet train from San Francisco to Los Angeles.

Brown summed it up with: "government should pursue ambitious ventures even during times of economic strife."

Local economic-development leaders might well shake their heads in frustration, agreeing with the premise of a state that needs to be "ambitious" in times like these, but not in pursuit of a bullet train.