Redevelopment survives the weekend
Late Thursday I tweeted that after a number of budget-related bills were passed, the Assembly didn’t get around to dealing with SB 77. Stuck at a 53-23 vote with only one Republican holdout needed, the bill would have to wait until Monday.
Redevelopment got a three day reprieve because the California Republican Party was holding its annual convention in Sacramento, just blocks from the Capitol building. Though I choose not to pay much attention to party politics, it was clear from the various updates coming out of the CRP bash that the whole affair seemed a bit too Lord of the Flies to get anything substantive out of it. Republicans aren’t just worried about unity, they’re wondering if they’re relevant in the state.
The fate of redevelopment may be a hot-button issue, but it pales in comparison to Governor Brown’s interest in extending tax hikes. Brown’s budget proposal is predicated on half cuts, half taxes, which on the surface looks fair. It’s the details of it that have gotten people upset, which is not surprising. The Republicans, who have rallied hard for more cuts and an end to that tax extension, simply don’t have the numbers to do anything other than be a spoiler in Brown’s plans. That’s where redevelopment comes in. Should SB 77 not pass, it would throw a monkey wrench into the budget proposal, inevitably delaying the final budget while the Democrats look for other places to bridge the gap.
Redevelopment as a tool is broadly supported and reviled by people in both parties, so it’s not as though there were some ideological divide there. The delay in getting the budget framework passed (it was supposed to happen 10 days ago) has allowed cities to come up with an alternative proposal that may make its way through the legislature in short order. The proposal, which has not yet been introduced in bill form, allows for redevelopment agencies throughout the stake to remain intact while pledging more tax increment as passthroughs to local schools. The League of California Cities has the outline:
Local redevelopment agencies can voluntarily suspend their housing set-aside for FY 2011-12. An equivalent amount of funds must then be contributed to local school districts in project areas.
- In exchange for this contribution of funds for FY 2011-12 to local schools, the agency will be allowed to extend the project area’s life by TWO YEARS.
In addition, or alternatively, redevelopment agencies could voluntarily contribute up to 10 percent of their non-housing tax increment revenue stream to local school districts each year for 10 years, beginning in FY 2011-12.
- The tax increment revenue stream they could contribute would be calculated as a percentage of the gross tax increment minus the existing pass-through payments to local taxing entities.
- For each percentage of tax increment paid to schools, an additional year could be added to the project area life, up to a maximum of 10 years. For example, if five percent of tax increment was dedicated to schools, the project area life could be extended for five years.
The gist of this is that cities would be trading affordable housing funds for school funds. This is driven by several people in some of the largest cities in the state who believe that, at least in their jurisdictions, there is enough affordable housing already and that more would only harm local and state governments more from a revenue-and-cost standpoint. What I don’t get is the use of the word “voluntarily.” How exactly would the budget shortfall be bridged by some shaky pledges from the cities? The League positions this proposal as the “lawsuit free” solution, as it would hold up Prop 22 and keep cities from having bondholders pull the trigger on lawsuits against the state.
It’s unclear who would write and sponsor this redevelopment bill, since Brown has been using his muscle to get the Democrats in line and moving forward. It all may be moot anyway, since SB 77 will get called for a vote again sometime in the near future. We’ll find out soon enough.