During the last few days of 2011, the California economy was dealt a significant blow. A California Supreme Court decision effectively eliminated the state’s community redevelopment agencies by upholding Assembly Bill X1 26. While AB X1 26 was endorsed by the court, a second bill that allowed redevelopment agencies to survive by paying what many called a “ransom” fee to the state’s general fund was rejected. The loss of this option leaves the fate of redevelopment projects across the state in question. California’s redevelopment agencies are now set to be dissolved on February 1. The loss of this important economic stimulator will have a substantial impact on the business community and the state’s long-term economic recovery. Community redevelopment agencies are vital to companies and the community as a whole by helping to reinvigorate blighted neighborhoods and boost the economy. Community redevelopment agencies work by identifying blighted project areas in need of development and then supporting projects in these neighborhoods. The tax dollars generated by these development zones are reinvested in the communities where they originated, continuing to grow the local economy. Currently, the Community Redevelopment Agency of Los Angeles (CRA/LA) has 86 major projects that are considered “enforceable obligations.” This means the projects have active and fully-executed agreements, which could lead to costly litigation if commitments are not honored. More than $300 million of CRA/LA funds are already invested in the projects, with a total development cost of more than $4.8 billion. Millions of dollars in San Fernando Valley projects are on the “enforceable obligations” list. These projects include affordable housing, a job training center and community improvements that, in total, would create 932 construction and 97 permanent jobs. Across the City of Los Angeles, there are 86 projects that would create thousands of jobs. In addition to the projects considered “enforceable obligations,” there are more than 100 projects citywide and 10 Valley specific projects that are in the CRA/LA pipeline. These projects would mean millions more in local economic investment and job creation, but they will likely never be realized. Community redevelopment agencies have already proven their successful contributions to our economy. Statewide, redevelopment supports 304,000 full- and part-time private sector jobs each year, including 170,600 construction jobs, and contributes more than $40 billion annually to California’s economy. Additionally, redevelopment construction generates $2 billion in state and local taxes a year. Locally, redevelopment activities support nearly 75,000 jobs in Los Angeles County. Eliminating redevelopment agencies not only puts these jobs in jeopardy, but it removes an important economic tool to create more jobs in the neighborhoods that are most in need. The loss of these crucial and self-sustaining redevelopment zones will be devastating to local economies. Some lawmakers have recognized the serious consequences of cutting redevelopment funds. Sen. Alex Padilla introduced a bill (SB 659) that would temporarily postpone the dissolution deadline to give the Legislature time to institute a new community redevelopment program. The Valley Industry and Commerce Association (VICA) backs these efforts and encourages members of the community to contact their Valley legislators to urge their support for SB 659 and community redevelopment. Remind our leaders that community redevelopment agencies are vital economic development tools that create local jobs and bolster our state’s economic recovery. They must be protected. Will the loss of redevelopment agencies impact your business? What do you think local governments should do to protect redevelopment projects? Email your responses or thoughts about the column to [email protected].
Redevelopment Uncertainty Hurts Area Economy
