California Mayors Offer $1.7 Billion Bond Plan to Save Redevelopment Zones
California should borrow from Wall Street to help ease its $25 billion deficit instead of following Governor Jerry Brown’s budget-cutting proposal to eliminate redevelopment agencies, a group of mayors led by Antonio Villaraigosa of Los Angeles proposed.
Under the plan proposed by Villaraigosa, the state would sell $1.7 billion of bonds maturing in 25 years. Redevelopment agencies would pay $200 million a year in debt service on the bonds and would hand over 5 percent of their revenue each year to the state. In exchange, the agencies wouldn’t be abolished.
When the mayors met with Brown in a bid to save the programs last month, the governor asked for alternate proposals, according to Sarah Hamilton, a spokeswoman for Villaraigosa. “The conversation is ongoing,” she said in an interview yesterday.
Brown, seeking to push spending back to 2005 levels, wants to abolish redevelopment authorities and shift their money to school districts and other local government bodies. He’s said he wants a budget absent of one-time fixes and gimmicks used in years past to paper over deficits.
“The governor has made it clear that any plan involving smoke, mirrors or gimmicks will be dead on arrival,” said Evan Westrup, a spokesman for Brown.
The mayors, such as Villaraigosa and Kevin Johnson of Sacramento, have said city redevelopment agencies are a critical economic development tool. California Treasurer Bill Lockyer opposes the bonding proposal.
‘Not a Solution’
“It’s not a solution,” said Tom Dresslar, a spokesman for Lockyer, in a telephone interview yesterday. “It’s another gimmick that doesn’t fix the problem and just puts the state deeper into debt.”
Under a 65-year-old California law, if a city or county designates a redevelopment area to address urban blight, the agency receives any increase in property-tax revenue that results, known as the tax increment. If there were no redevelopment districts, then schools and local governments would get those receipts.
Brown’s proposal would use $2.2 billion in revenue freed up by the move to retire outstanding debt and devote the rest, almost $3 billion, to schools, health care and the courts. The state ordinarily sends $1.7 billion to schools to make up for property taxes now going to redevelopment agencies.
A conference committee made up of members from the Assembly and the Senate, both controlled by Democrats, began meeting yesterday to reconcile changes each chamber made in Brown’s proposed budget to produce a unified spending plan. Both chambers included the $1.7 billion in savings from abolishing the redevelopment agencies in their versions, while saying alternatives would be considered.
To contact the reporter on this story: Michael Marois in Sacramento at mmarois@bloomberg.net
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net
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