Is redevelopment coming back? Campos bill would re-establish tax increment
By Steve Scauzillo, Staff Writer
You won't find the term redevelopment anywhere in Assemblywoman Nora Campos' bill. Instead, the Silicon Valley legislator is offering cities and counties the next best thing: the powerful tool known as tax increment financing.
Under Assembly Bill 690, cities can form "job and infrastructure districts" (JID) that would sell bonds and finance construction of public works projects as well as turn old warehouses into job-creating businesses. As was done under redevelopment in the past, the "districts" would pay off the debt service by capturing the increase in property tax revenues, known as tax increment.
Cities and business groups are jumping at this newest manifestation of economic development power. Many are still smarting after the state Legislature and Gov. Jerry Brown ended redevelopment in 2011 and forced redevelopment agencies to liquidate their holdings and send the check to the state.
Campos' bill may be just the first of many similar bills sent down the pipeline, even if the author and its supporters refuse to label it as a redevelopment redux. All eyes will be on Brown, who doesn't want to see redevelopment power resurrected.
"No. We are never going to use that term as long as we live," joked Mary Ann Lutz, mayor of Monrovia. The San Gabriel Mountain foothill town has won awards for using redevelopment as a tool to revitalize its downtown and turn Huntington Drive into a high-tech corridor with the nationally known technology company that designs and manufactures unmanned surveillance systems, Aerovironment, as a keystone. "There is going to be a lot of them (bills), even though we've been told the governor will veto them," she said.
Supporters of the bill shake off the label given by naysayers - "RDA 2.0," said Campos' chief of staff Sailaja Rajappan.
"No. It has nothing to do with so-called neighborhood blight," she said. "AB 690 is about job creation and using the tool of tax increment financing." Campos spokemen point out that tax increment financing is used in 47 other states.
Campos' bill separates tax increment financing from redevelopment. Also, instead of using "blight," a loosely defined metric under the old redevelopment rules, the bill substitutes unemployment. A JID must have an area of high unemployment, Rajappan said. The bill requires creation of 10 prevailing wage jobs for every $1 million invested.
Once a city decides to create a JID, it would need approval of 55 percent of the local voters, she explained.
A JID would bring a city and a developer together to remake an abandoned warehouse into a supermarket or a modern industrial facility, for example. Cities could join with other municipalities with high unemployment to build roads, bike lanes, bridges, parks or libraries, according to the bill.
"The first test is: Do you have high unemployment? If you don't, we are not talking to you," Rajappan said. "The only way a project would qualify is if it would generate jobs. Again, this is not about building a stadium in San Diego. "
Opponents admit this may be a "more honest" reiteration of redevelopment but some still worry about abuses.
"It is the same thing warmed over and will lead to the same abuses that existed before," predicted Steven Frates, director of research at the Davenport Institute at Pepperdine University Graduate School of Public Policy. "It is political payoff for politicians and unions. "
However, the Southern California Association of Governments, which represents 191 cities in six counties, and the California Business Roundtable, have climbed on board. As part of a goal to stimulate job growth in Southern California, SCAG President and Simi Valley Councilman Glen Becerra met with Campos in Sacramento two weeks ago and was sold on the idea. He's convinced more cities will jump on the bandwagon as the new bill moves through legislative committees and eventually to the Assembly and state Senate floors for votes.
"With the demise of redevelopment, there needs to be a judicious use of tax increment financing because it is a very powerful tool that local governments can have at their disposal, if used properly," Becerra said Thursday.
So far, the League of California Cities has not taken a position on the bill, said Eva Spiegel, communications director based in Sacramento.
The measure is being backed by the Los Angeles County Business Federation, or Bizfed, as a way to move brownfields and other stalled properties toward new, job-creating retail, industrial or office developments.
Larry Kosmont, a Bizfed member and a specialist in economic development, helped Campos write the bill. He had the "factory belt" of Los Angeles County in mind. Cities such as El Monte, Southgate, Montebello and Huntington Park have 15 percent or higher unemployment and are littered with abandoned buildings that once housed hundreds of workers.
"The reason no one is buying up these old buildings is because they are too expensive for any company to retrofit them for handicap access and just to make it work. So, they export those jobs to Texas or Glendale, Ariz. where they can buy a cheap building," Kosmont explained.
"This (AB 690) will level the playing field for the state of California. It will finally give businesses an ability to look at California in a better way," Kosmont said.
When asked if giving tax increment financing back to cities would give breaks to corporations such as Walmart and Starbucks as corporate welfare, a common criticism of redevelopment in California over the last several decades, he said no.
"It would allow companies to create new jobs. I think the people of California would be getting the breaks," Kosmont said.