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SCVNews.com | Opinion/Commentary: Redevelopment On the Rebound? | 02-20-2014
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Commentary by Leon Worden
| Thursday, Feb 20, 2014

The same people who championed Proposition 13 in 1978 are working to restore redevelopment in California.

On Wednesday – two years after the governor and Legislature wiped redevelopment off the state’s books – Attorney General Kamala Harris cleared the way for a group of seasoned campaign consultants to gather signatures for a ballot measure that would secure a place for redevelopment in the California Constitution.

It’s called the JEDI Act – Jobs and Education Development Initiative Act – and its official proponent is Philip D. Kohn. He’s an attorney with Rutan & Tucker LLP, Orange County’s biggest full-service law firm.

jedi022014Helping out is Stu Mollrich of Forde & Mollrich. They’re the people who managed the Proposition 13 campaign. Tax fighter Howard Jarvis had his name on it, but Mollrich and partners Arnold Forde and Bill Butcher put it over the top.

Their resume includes the successful campaign to defeat California Supreme Court Justice Rose Bird, way back when Jerry Brown was governor of this state the first time. Between then and now, among other things, they’ve managed the campaigns of two other governors – Pete Wilson and Arnold Schwarzenegger.

Kohn started gathering support last year for the restoration of redevelopment – a tax-increment financing mechanism designed to eliminate blight in urban centers. It was the mechanism used for 15 years by the city of Santa Clarita to revitalize Old Town Newhall.

Redevelopment has been around for 50 years, but the city of Santa Clarita hasn’t. Santa Clarita was a relative late-comer to redevelopment, and it was nowhere near done bringing new businesses and economic activity back to Newhall when the state pulled the plug.

The mechanics of redevelopment aren’t widely understood, and past abuses in big cities have been well publicized – so it’s an easy target.

In essence, redevelopment is a self-fulfilling prophesy: When public dollars are invested in an urban district, private property values go up. When properties are reassessed at higher values, property taxes go up (with or without redevelopment. Redevelopment isn’t a tax.) When property tax receipts increase, a fraction of the increase goes to the redevelopment agency, which uses that money to make the next wave of improvements, and the cycle begins anew.

In Santa Clarita, it took about a decade from the launch of redevelopment in 1997 before that fraction was big enough to start making the first substantive improvements. Thus, Santa Clarita really only enjoyed the true benefit of redevelopment for a few years, from 2007-2008 until 2011 when the Legislature halted redevelopment activity. That short period was when the city’s redevelopment agency fixed up the streets and assembled property for a new public library, and new businesses moved into the area.

Now, roughly two years from the day redevelopment died, a number of those new businesses are gone – and some of the older ones, too.

Prior to redevelopment, Santa Clarita’s experience mirrored that of other cities with a blighted urban core. A pre-redevelopment economic study in 1993 showed that while property values were increasing throughout Santa Clarita as a whole, they were actually declining in Newhall.

When property values decline, total property tax revenues decline, and the agencies that get a share of the property taxes – schools, water agencies, fire, even the county and city – get less.

So we started redevelopment in Newhall and property values began to rise, and schools and other agencies got more money from tax receipts generated in Newhall. Main Street approached full occupancy, and redevelopment provided good construction jobs even as the nation struggled with its worst economic downturn in 80 years.

Kohn, the proponent of the new initiative, has said that in addition to restoring the financing mechanism for local municipalities, his measure includes “provisions to ensure that school districts are kept whole and will not be subject to revenue loss.” It’s a tacit nod to the argument made in 2011 when the Legislature was looking for another short-term, smoke-and-mirrors budget fix irrespective of the long-term consequences.

Kohn cites figures showing that in 2009, redevelopment was responsible for 303,946 full- and part-time jobs in California including 23.4 percent of all construction jobs; $2 billion in state and local tax revenues; and $40.79 billion in total economic activity.

Getting rid of redevelopment, as was done in 2012, wasn’t going to “deliver a fraction of the short-term revenues that were promised,” he said, and it has “eliminated a multi-billion-dollar revenue stream that has been used for decades to create jobs, rebuild blighted neighborhoods and energize struggling local economies.”

His new, 78-page JEDI Act mirrors much of the former redevelopment law, with small differences such as a 10-percent set-aside, rather than 20 percent, for low- and moderate-income housing.

“High unemployment is the new blight,” according to the preamble of the proposed initiative. “JEDI will put thousands of Californians back to work and generate billions of dollars in new tax revenue for public schools without raising taxes or increasing state debt.”

The backers must gather 505,000 signatures to qualify the initiative for the June ballot. Mollrich has said publicly that he’s shooting for 850,000, just to be on the safe side.

Watch for his paid signature gatherers in front of a grocery store near you. Just don’t go looking for a grocery store in downtown Newhall.

 

Download the JEDI Act [here].

 

Leon Worden is president of SCVTV and served on the city of Santa Clarita’s Newhall Redevelopment Committee from its birth in 1997 to its death in 2012.

 

 

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