One of the most controversial suggestions Gov. Jerry Brown made this week to balance the state budget would take money from redevelopment and redistribute it to schools and other local government services. This idea has generated much debate in San Diego.
If you pay property taxes, you’ve probably seen the colorful pie chart that comes along with the bill. It shows you where your property taxes go. The biggest slice – the blue slice - goes to schools. There are red and green slices that go to cities and counties. And then there’s a yellow slice, which is for redevelopment. Redevelopment currently takes up almost 11 percent of your property taxes.
That’s what the governor proposes to change. He wants to take that money earmarked to stimulate development, and add it to the money local governments can use for other services.
In his budget address this week, Brown said that would help the state.
“What we’re doing here is spending money at the local level that the state doesn’t have,” Brown said. “So we want to take that money and leave it at the local level for the purposes that it was historically intended. That’s police or fire or local activities...counties, or schools.”
The city of San Diego has a redevelopment arm that has transformed downtown with Horton Plaza and numerous new hotels and towers of glass-fronted condos.
But the Centre City Development Corporation, or CCDC, recently faced a watershed moment. It was approaching the time when it would no longer qualify for special property tax funding. In what has been called a back-door maneuver, State Assemblyman Nathan Fletcher delighted downtown supporters by passing legislation in Sacramento to extend the flow of property tax money for downtown redevelopment by almost two decades.
At a meeting of planners and businesspeople this week, Fletcher defended the move.
“Was it unexpected?” he asked, rhetorically, “Yes. Was it bold? A little bit. ”
He got a laugh from that audience.
But not everyone is convinced dedicating more money to CCDC is the best use of scarce property tax dollars. Catherine Rodman, an attorney and affordable-housing advocate, has sued the city and CCDC. She says the bill funnels large sums of public money into projects without enough public input.
“The deed has been done,” Rodman said, “and unless it’s challenged, as it has been, they are going to get away with it, without any public input or accountability.”
Rodman said CCDC’s projects have focused on big developments like Petco Park. The next item on the agenda is a new Chargers’ stadium.
“Whatever it is, it is elitist driven or special-event driven,” Rodman said. “It is not really listening to the community. Is this really something we need and that the public coffers should pay for?”
Assemblyman Fletcher argued his bill was essential to keep downtown redevelopment humming along.
“Private development is facing hardship due to a prolonged recession,” he said, “and civic development needs are competing with scare local and state funds.”
Therein lies the rub. Redevelopment does have benefits: it generates economic activity, including millions in sales and tourist taxes for the city. But at a time when police and fire services are being cut and social services are on the chopping block, should redevelopment agencies have priority over scarce property tax dollars?
Governor Brown acknowledges that redevelopment agencies have done great things for blighted communities, but he says it’s time for local government to find another way to fund it. He suggests giving local government the power to raise other taxes to pay for it.
Keith Curry, an expert on redevelopment financing who has advised local governments around Southern California, said Brown’s plan won’t fly.
“The basic premise is, he’s dissolving redevelopment agencies, he’s allowing local government to impose a different tax,” Curry said. “Most people would view that as fatal to redevelopment in California.”
The city of San Diego’s independent budget analyst, Andrea Tevlin said if the governor’s plan is approved, the city would get back a portion of the redevelopment dollars. But she said the big unknown is what the city would lose in future revenues by not doing redevelopment.
“So you are getting direct money - a portion of the money - back to the general fund under this proposal,” Tevlin said, “but then you don’t know what you’re losing in the future by redevelopment projects not being able to move forward, and the revenues that those generate. There are two sides of this story.”
The governor is proposing to take a slice out of the property-tax pie to make the other slices bigger. But some argue removing redevelopment will make the whole pie smaller in the future.
