California’s 425 Redevelopment Agencies Close Their Doors Today

At midnight last night, California’s 425 redevelopment agencies closed their doors as a result of legislation enacted this past year (AB 26) which eliminated the state’s economic development program.  The economic development program, which was established under California’s Community Redevelopment Act (Cal. Health & Safety Code, §§33000 et seq.) more than 60 years ago, was intended to help local communities revitalize blighted communities.

Local redevelopment agencies received approximately $5 billion in state funding under the program each year, but the program, which critics argued lacked oversight as to how money was spent, was axed by Governor Brown in June 2011 as a way to help alleviate the state’s multi-billion dollar budget deficit.  Local redevelopment agencies attempted to overturn the law, but the California Supreme Court ruled that the state had the right to abolish the program in a decision issued two days before the end of the year, on December 29, 2011.

For developers, design professionals, contractors, and public entities, the abolishment of the state’s economic development program is a significant loss of funding at a time when the state’s beleaguered construction industry has already been hard hit by the unprecedented economic decline of the past few years.  There may be a segment of the construction industry which may benefit, however.  For those involved in school construction, the multi-billion dollar savings to the state may mean that additional funding may be in the pipeline for school construction.

3 Responses to “California’s 425 Redevelopment Agencies Close Their Doors Today”

  1. Ted Mankowski

    Garret…I like your comment about how state dollars will hopefully move to another sector of construction. For whatever it’s worth, I think Jerry Brown got a first hand view of how inefficient the system is in utilizing redevelopment funds for pure construction vis-a-vis paying City employees to manage the program. Case in point, look at how long it took the City to redevelop lower Broadway and how long it took to redevelop the City’s half of the Oakland Army Base. I worked as an engineering manager for 31 years at the City and Port so frankly, I agree with Brown’s decision. I’m sure I don’t see all of the issues and nuances, but in my humble opinion, the City(ies) should stick to what they do best i.e. legislating and regulating. They are risk-averse and therefore not good at developing. P.S. I’ve had very good experiences woking with Wendle Rosen over the years…Ted Mankowski P.E.

    Reply
  2. Garret Murai

    Ted, thanks for the comment and your kind words. Having worked on the transition of the Oakland Army Base to the City of Oakland and the Port of Oakland back in 2006, just before all of the buzz of the Wayans brothers building a movie studio at the base, I can certainly attest to the long (and continuing) redevelopment time line of the base. Best to you!

    Reply

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