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Posted by xaviervir on January 25, 2011

The following article appeared in today’s West County Times:

Controller to audit Calif. redevelopment agencies

By JUDY LIN Associated Press
Posted: 01/24/2011 02:25:19 PM PST
Updated: 01/24/2011 05:17:08 PM PST
SACRAMENTO, Calif.—The state controller’s office announced Monday that it will examine how well tax dollars are being used by redevelopment agencies, which have emerged at the center of a debate over California’s budget.Controller John Chiang said his office will examine 18 of the state’s more than 400 redevelopment agencies, including those in Los Angeles, Sacramento and Riverside. 

The audit will review how well agencies are fighting urban blight, whether they are sending enough tax money to school districts, and the compensation levels of their executives.

Gov. Jerry Brown has proposed a phase-out of redevelopment agencies, known as RDAs, as one way to help close California’s $25 billion deficit. City and local government officials have criticized his plan, defending redevelopment agencies as one of their main tools to kick-start construction projects and create jobs.

The Democratic governor said the tax revenue would be better used for schools and public safety but city officials fear Brown is taking away an important economic development tool.

“The heated debate over whether RDAs are the engines of local economic and job growth or are simply scams providing windfalls to political cronies at the expense of public services has largely been based on anecdotal evidence,” Chiang said in a statement. “As lawmakers deliberate the governor’s proposal to close RDAs and divert those funds to local schools and public safety agencies, I believe

it is important to provide factual, empirical information about how these agencies perform and what they bring to the communities they serve.”Chiang spokesman Garin Casaleggio said the controller hopes to have the audit completed in early March to inform lawmakers as they take up the redevelopment debate as part of budget negotiations. He said the 18 agencies were selected to reflect urban, suburban and rural communities.

Krista Noonan, a spokeswoman for the California Redevelopment Association, said the selected redevelopment agencies are encouraged to participate in the audit.

“We’re confident that the controller will finally validate that redevelopment is a major economic development tool,” Noonan said. “It’s the best job creator in California right now.”

Chris McKenzie, executive director of the League of California Cities, said redevelopment agencies create 304,000 jobs each year, over half of them in construction. They generate $40 billion in statewide economic activity, he said.

Redevelopment was a movement born out of the post-World War II era as an effort to fight urban decay. Today there are 425 redevelopment agencies in California and they have authority to acquire land using eminent domain, clean up or demolish dilapidated properties, and develop them for commercial and residential use.

The agencies are funded by increases in property tax revenues from the blighted areas they fix up, known as tax increment financing.

Over time, critics say redevelopment has become a cash cow for developers of big box retailers, sports arena and even amusement parks while cities, counties and schools are losing out on billions in property taxes. According to the state controller’s office, tax increment revenues amounted to $5.7 billion in 2008-09, an increase of 5.8 percent from the previous year.

Last fall the state Senate Office of Oversight and Outcomes found the public has little assurance that redevelopment officials were spending 20 percent of their revenues on affordable housing as the state requires.

The report looked at a dozen redevelopment agencies and found much of affordable housing funding was being used on staff salaries and administration, rather than for constructing and rehabilitating homes. The report also raised questionable spending practices, such as hiring a lobbyist and funding a public relations campaign.

Noonan, of the redevelopment association, said that while any case of abuse is one too many, there are “hundreds of other good things that redevelopment is doing throughout the state.”



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