California Redevelopment Assn.’ Bill Carlson Outlines CRA Reforms

For our readers, please describe the primary role and priorities of the California Redevelopment Association. 

We do three things. We do all of the legislative representation for California redevelopment agencies. We hold educational workshops and seminars on redevelopment subjects, and we do public information and publications on redevelopment issues.

We’re now dealing most heavily with redevelopment reform, addressing both perceptions and actual abuses that come to the attention of the State Legislature. As an association, we’re doing what we can to address those issues head on.

We’re also doing it with a gun held to our head since the Governor is proposing another $300 million to $400 million cut in redevelopment this year. We’re suggesting to the Legislature and the Governor’s office that this is the wrong year to be cutting back redevelopment and the economic development activities we undertake. In the long term, we can provide more monies to the state and local taxing entities by reducing or eliminating the hit on redevelopment and implementing a legislative reform bill for redevelopment.

Of what local redevelopment activities within California is your association most proud?

There are many cities that are doing a credible job at redevelopment and yet are being criticized by the Legislature. The City of Santa Ana has undertaken numerous improvements in their downtown core and they’ve gone into their neighborhoods in a heavily minority community to do excellent neighborhood revitalization and housing. You would think that this would be the kind of agency we could point to with pride.

But at the same time, members of the Legislature are saying, “Yes, but Santa Ana is forming a project area that will include over 80% of the city within redevelopment.” Their goal is to work with their school district to do school facilities improvements and park improvements in heavily over-crowded neighborhoods. We get into perceptions of what redevelopment should be and that’s been a moving target over the years. What’s legal or acceptable one day becomes illegal and unacceptable in later years as the redevelopment laws change.

We take criticism for having project areas with vacant land, for example, yet that was a legitimate use of redevelopment when the projects were adopted.

Are there schisms within the association between the needs of large and small city redevelopment agencies?

I wouldn’t say that our debates break down in quite that way. More often, there are disagreements over the purposes of redevelopment, because inner-city areas and more suburban communities undertake programs that are quite different.

One of the issues we’re trying to address is the competition for sales tax generators — the “big box” retail users such as Wal-Mart, Costco, Price Club, or auto malls, that tend to need large amounts of acreage. Those types of uses generally don’t go into downtowns, but into suburban areas, where there are large parcels of land next to a freeway. Developers play one city or one redevelopment agency against another: that’s an issue we’re criticized for and CRA is committed to addressing. 

We want to use the tools of redevelopment to seek traditional retail downtown, but exclude these vacant parcels adjacent to the freeway. Sales tax is primarily a city issue, so we’re just trying to remove redevelopment from that equation.

We understand that you’re working with Assemblyman Isenberg on a major redevelopment reform bill for this session of the State Legislature.

That’s AB 1290, a bill which is a skeleton, a “spot bill” — we’re still working with the author and our membership what will be included.

Would this bill address the perceived abuses with cities such as Adelanto, where virtually the entire city has become redevelopment?

We’re attacking that through revisions to the definition of blight. We’re holding a series of regional meetings with our own members, discussing the potential things that might go in the Isenberg bill and we hope to resolve it by mid-May.

You mentioned earlier that the budgetary hit this year from redevelopment agencies might amount to $400 million. Could you estimate what the actual impacts of cuts might be?

I’ve looked at this issue in several different ways. To give you some background, redevelopment agencies responding to a recent CRA survey estimate that between the three years of 1992-93 and 1994-95, they will spend $1.6 billion on public infrastructure, facilities, and buildings. Total agency expenditures for all purposes, including debt service, is estimated by the responding agencies to total $5.4 billion for these three years.

The responding agencies estimate that $441 million of state transportation funding will be leveraged by redevelopment contributions over the same three-year period. And redevelopment expenditures have leveraged $9.7 billion of private investment in housing, commercial, industrial, and other projects over the past three years ending in 1992-93.

So what are the impacts of the cuts? Our survey indicates that the projects and programs most likely to be affected by the 1992-93 shift of the Educational Revenue Augmentation Funds (ERAF) include infrastructure (66% of the agencies); business development (58%); downtown renovation (51%); business retention/expansion (47%); business attraction (45%); and industrial development (33%). 

The responding agencies also estimated that 3,400 temporary construction jobs, 2,100 permanent jobs, and 84 agency jobs were cut in 1992-93 due to the shift of the ERAF funds. 

How are redevelopment agencies shifting their mission during the 1990s and how does the state's new preoccupation with economic development issues affect this mission? 

Redevelopment is primarily blight elimination, but in order to eliminate blight, redevelopment agencies have always used economic development tools. More than economic development, what we' e seeing emerge is the question of whether redevelopment agencies should go beyond bricks and mortar. So now we're talking about the emerging job training programs, credit enhancement arrangements with developers or small businesses. These are things we've either not been able to do by law, or weren't interested in doing previously so that we could preserve funds for the bricks and mortar. 

Given our economic realities, there is also a greater degree of interest in the use of redevelopment funds for economic development. We still have limitations on how we can use our funding, but in the Isenberg bill we may be proposing an expansion of those into the economic development arena. 

Aside from the Isenberg bill, what other state legislation is of particular concern this year to redevelopment agencies around the state? 

There are two bills. The first would be AB 978 carried by Assemblyman Hauser, who's chairman of the Assembly Housing and Community Development Committee. This is a redevelopment reform bill that packaged together some ideas that didn't pass over the last few years. It limits the portion of a city that can be in a redevelopment project area to 60% - any agency that exceeds 60% of the city's territorial limits would have to forego issuing bonds until it reduces the project area's size. The bill also includes sales tax reform, and a requirement that all redevelopment projects - both existing and new - have a time limit. 

We're opposing the bill and are working with the author to try to modify it. It may be combined into the Isenberg bill if we can work together on these issues. 

The second bill is AB 1887, also sponsored by Hauser, which deals with the statement of indebtedness, an arcane provision in redevelopment law that says you have to have debt to collect any property taxes. CRA has worked on language to provide a standardized procedure for accounting for agency revenues. CRA is also opposing the Department of Finance proposal to limit tax increment to current year debt service.

Finally, how would you assess the likely budget scenarios for redevelopment in Sacramento? 

This could drag on well past last year's negotiations. It's eerie today because there's so little happening ­ what activity is occurring is behind closed doors. It's going to be a very tough battle for local government. The state's desperate - it will look for funds wherever it can - so redevelopment agencies will likely have some money taken away. The only question is how much, and that could be the same amount as last year or a worst case scenario of $400 or $500 million.