Redevelopment has literally changed the way that California looks.
Scores of downtown office buildings, hundreds of commercial and industrial structures, tens of thousands of affordable homes and apartments and vastly improved public works exist today because of redevelopment. And yet, local officials' use of their redevelopment powers remains painfully controversial in many California communities.
What redevelopment does and why it's so controversial are inseparable.
In this short piece I'll explain the basics of redevelopment agencies, their powers and how they work. But I won't take a position on Measure A, the redevelopment issue on the June 8 city of Ventura ballot. That local political question requires Ventura's voters to make up their own minds after educating themselves about redevelopment. As an outsider, I neither support nor oppose redevelopment.
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Every city in Ventura County--plus the county government itself--uses redevelopment. In fact, in 1996-97, the 11 redevelopment agencies got $26.4 million from their 21 project areas.
What is a redevelopment agency? Officially, each community redevelopment agency is a state agency run at the community level by local officials. In nearly all communities, the city council or county supervisors run the redevelopment agencies. These are not hidden, invisible governments. Rather, local elected officials are in charge of each community's redevelopment program.
State law gives redevelopment agencies two extraordinary powers: property tax increment financing and property management powers (particularly eminent domain). These two powers go beyond the powers of ordinary local governments, such as counties, cities or special districts. These extraordinary powers are what make redevelopment agencies so unusual--and so controversial.
Property tax increment revenues are redevelopment agencies' main revenue source. To raise the public capital needed for their redevelopment efforts, local officials sell government bonds called tax allocation bonds to private investors. They use that money to build public works, buy property, make loans and promote affordable housing. Where do they get the money to repay those bonds? The California Constitution and state law allow redevelopment officials to capture the property tax increment revenues that come from inside the redevelopment project area.
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