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Redevelopment important to infrastructure

March 04, 2011

With the announcement of his proposed new budget, Gov. Jerry Brown is calling for the closing of the individual redevelopment agencies across the state, and tapping those redevelopment funds to fill a portion of the state budget gap.

Well, what exactly is “redevelopment?” Redevelopment is a format that is permitted under current state law whereby individual municipalities can form redevelopment project areas in areas of blight in order to provide planning and financing tools to eradicate that blight, and to improve infrastructure, do capital projects and create affordable housing.

An interesting part of redevelopment is that it is essentially self-funding. That is, no money from the General Fund of municipalities goes into the redevelopment agencies, nor does the state provide any funding. Rather, under redevelopment law, the existing property-tax base of a proposed redevelopment project area is determined and that amount of money (called the “tax base”) continues to be paid, in full, to all taxing authorities.

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The increase in property taxes paid above this tax base is called the “tax increment” (presumptively created, to a large degree, as a result of new projects created by the new agency) and a portion of the tax increment is retained by the Redevelopment Agency. At the end of the redevelopment project area term, all future taxes revert to the prior taxing agencies.

The agencies use the portion of the tax increment to fund a variety of publically beneficial endeavors. In Burbank, when the city needed to replace its aging police and fire headquarters buildings in the 1990s, it put a bond issue on the ballot, which was rejected by the citizens of Burbank.

The city built the new state-of-the-art facility anyway, but paid for it completely out of Redevelopment Agency funds. When the school district needed $23 million as a part of its overall capital improvement plan, the city assisted, paying the entire amount out of redevelopment funds.

All of the public parking structures in downtown Burbank, all of our rebuilt fire stations, and virtually all of the affordable housing units within our city were made possible by the use of Redevelopment Agency funds.

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