Is money from redevelopments a valuable tool or a slush fund?

California’s dismal economy and deficit-ridden state and local budgets created a yeasty political climate for efforts to undermine state redevelopment laws and thus gain access to multibillion-dollar pots of money this year.

Local governments, cities mostly, can create redevelopment projects in urban areas plagued by blight, pump money into upgrading public facilities and underwriting private development, and then retain increases in tax revenue stemming from the new construction.

Cities became very creative in defining blight and using redevelopment funds to subsidize auto malls, shopping centers and other generators of sales and property taxes, and diverting billions of dollars from schools, counties and other local governments — eventually $5 billion-plus a year.

Legislative reforms to curb redevelopment abuses were enacted in the 1990s. Ever since, local agencies have been trying to chip away at restrictions on defining blight and using redevelopment funds to subsidize development in unblighted areas.

Several bills that would, in one way or another, soften state redevelopment restrictions were introduced during the just-concluded legislative session, including one that would have almost completely removed the shackles on declaring blight.

One measure, carried for the city of Downey, would have flatly declared an unblighted area as blighted so the city could subsidize a proposed electric car factory. It died only because Tesla Motors decided to put its new factory in the Bay Area.

Nevertheless, the Legislature passed another bill that would, in effect, do the same favor for some communities near the former Fort Ord Army base, allowing them to ignore current redevelopment law that bans subsidies to commercial development on unblighted land to help a big new shopping center become reality. Assembly Bill 1791 by Assemblyman William Monning, D-Carmel, could have insidious, long-term effects by setting a precedent for ignoring redevelopment reforms that other communities would be certain to emulate.

The other two bills reaching Gov. Arnold Schwarzenegger’s desk are less bothersome. Both were sponsored by the city of Los Angeles and would mildly expand the purposes of redevelopment to include rehabilitation of low-income public housing and creating small-business incubators.

Some ambitious communities want to go even further, seeking authority to funnel redevelopment funds into paying for police patrols or, as in the case of one bill that died this year, using redevelopment dollars to assist distressed homeowners.

Properly used, redevelopment can be a valuable tool for community improvement. Improperly used, it can become a political slush fund. And, that’s why maintaining the tight reform standards is important.

Dan Walters’ Sacramento Bee columns are syndicated by the Scripps Howard News Service.

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