Don’t let ‘crony capitalist’ agencies return to California cities

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One of former Gov. Jerry Brown’s crowning achievements came in 2011 when, in the midst of a budget crisis, he spearheaded the effort to shutter California’s controversial redevelopment agencies.

They epitomized “crony capitalism” by giving local planning czars the power to use eminent domain on behalf of politically connected developers — and by creating a slush fund to lavish public dollars on projects that were hatched in City Hall.

Redevelopment was created in the 1940s as a tool to combat urban blight, but was transformed into a financial gimmick that encouraged cities to subsidize big-box stores, auto malls and other tax-generating projects. Through a process known as tax-increment financing, redevelopment siphoned around 12 percent of the general fund from traditional public services (police, fire, education) to a mish-mash of often-questionable developments.

Brown and California lawmakers didn’t have any philosophical problem with it, but they needed the cash to plug a budget hole. After the state’s finances started to improve, Brown signed a few bills that brought back some elements of redevelopment in a piecemeal and limited fashion. Now that California’s budget has record surpluses, some lawmakers want to bring back redevelopment in its full, er, glory. The stated reason is to boost the state’s stock of affordable housing.

The main legislation is Assembly Bill 11 by Assemblyman David Chiu, D-San Francisco. Called the Community Redevelopment Act of 2019, it would allow cities or counties to create a facsimile of those old redevelopment agencies, although this time they would use tax-increment financing to fund affordable housing and infrastructure projects. Despite Chiu’s insistence to the contrary, it’s basically the same old pig with a bright shade of lipstick.

Fortunately, Gov. Gavin Newsom has shown skepticism toward the idea. In public comments in January, he said: “Bringing back redevelopment. I looked at it. We are putting more money now (into housing) than when we killed redevelopment. … And we are doing it in a way that doesn’t take money from the education system … and we are doing it in a way that doesn’t take money from the counties if we did re-establish redevelopment.”

Redevelopment is the wrong way to address California’s housing crisis. Yes, redevelopment agencies set aside a portion of their revenues for subsidized housing, but those projects often were used in wasteful ways.

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