Keeping the Focus Local

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In his Comment column in the Jan. 31 issue of the Business Journal (“Time to Chase CRAs Out of Town”), Charles Crumpley called for supporting Gov. Jerry Brown’s proposal to eliminate redevelopment agencies. But he didn’t take into consideration any unintended consequences.

Abolishing redevelopment agencies would kill hundreds of thousands of jobs and strangle billions of dollars in local economic activity while providing little financial benefit to the state. Redevelopment activities in California support an average of 304,000 full- and part-time private-sector jobs in a typical year, including 170,600 construction jobs. Redevelopment contributes more than $40 billion annually to California’s economy in the generation of goods and services, and generates $2 billion in state and local taxes.

The column also failed to take into account the state’s own numbers that show killing redevelopment will bring very little financial relief for California. That’s because redevelopment agencies have bond and other contract obligations in place that must be repaid before funds are available for other purposes. In fact, after this budget year, the state Department of Finance acknowledges zero state savings from shutting down redevelopment.

So there is little financial gain for the state, but huge financial pain for local communities. The city of Long Beach is no exception.

Long Beach’s Redevelopment Agency continues to make positive impacts on our local economy and the numbers speak for themselves. From 2002 to 2010, our Redevelopment Agency has invested in more than $101 million in public improvements in the North Long Beach area. And, for every $1 invested by the Long Beach Redevelopment Agency, $13 is returned in the form of economic activity. These direct investments in our local economy have paid for new and renovated parks, vital police and fire stations, and improved streets and medians. Those public improvements in North Long Beach alone have also provided more than 1,200 local jobs and as much as $156 million in business revenue, which translates into a direct boost to our local economy. Citywide, redevelopment creates 5,700 annual jobs in Long Beach in our inner urban core.

Projects at risk

By calling for the elimination of redevelopment agencies, nearly $90 million in planned public improvement projects over the next three years would be at risk, including a new library, police substation and four parks. Furthermore, ongoing vital efforts such as graffiti removal, code enforcement and neighborhood improvement programs would all be at risk of ending. This would translate into drastic impacts on some of our most underprivileged neighborhoods.

Our redevelopment agency is also an important partner in improving the quality of life for not only our residents, but also our young people. In the last four years, the Long Beach Redevelopment Agency built a community center at Admiral Kidd Park just outside Cabrillo High School. Admiral Kidd Park was most recently expanded at a cost of $7 million, which included $2.5 million for the demolition of “The Green Monster,” a gang-infested industrial building outside the high school. Redevelopment has proved time and time again that it is a critical public safety tool, tearing down crime-ridden buildings that result in hundreds of repeat calls for service from our Police and Fire departments.

Within walking distance of Washington Middle School, our Redevelopment Agency purchased and tore down a high-crime multiunit apartment complex, turning it into a full-size soccer field with murals from local artists and a playground for small children. Our Redevelopment Agency also worked with Long Beach Unified School District to acquire an ill-maintained hardware store to make way for a state-of-the-art magnet school.

We also can’t forget that the California Constitution requires tax increments be paid to redevelopment agencies to repay the public cost of redevelopment projects. Additionally, more than 61 percent of voters passed Proposition 22 in November, which specifically stopped the state from raiding local redevelopment funds. Redevelopment agencies throughout California have contractual bond obligations, and have entered into tens of thousands of contracts with banks, developers and bond issuers. Jeopardizing these contractual obligations will shake investor confidence, undermine the creditworthiness of the state, and increase state and local bonding and borrowing costs for years to come.

Finally, the practical application of the governor’s proposal would be a financial nightmare. California has 398 redevelopment agencies, and more than 700 project areas, with hundreds of thousands of jobs and billions of dollars in contracts and economic commitments now at risk.

The concept of redevelopment is intended to evoke a method of generating local tax revenues and reinvesting them in our most investment-starved neighborhoods. Granted, while redevelopment finance may be complicated, the issue at hand is rather simple. The governor is proposing to take these same locally generated tax revenues intended for reuse within the neighborhoods most in need of investment and use it to balance the state budget.

The governor and the Legislature should focus on cutting back areas of government that drain resources before eliminating local economic development tools, such as redevelopment agencies, which actually help turn taxpayer investment into increased economic vitality and new revenues for all levels of government.

Randy Gordon is President and Chief Executive of the Long Beach Area Chamber of Commerce.

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