More or Less Redevelopment

Sacramento Bee Columnist Dan Walters wrote a piece that recently appeared in the Mercury News that voiced support for the governor’s plan to take money from the state’s redevelopment agencies to help close the state’s budget deficit.  The article got the attention of San Jose’s Redevelopment Director, Harry Mavrogenes.  Their debate is instructive.  Here’s a second look at some of their arguments.

“Redevelopment funding is one of the few tools that local governments still have to generate economic activity, meet the infrastructure needs for a growing economy and build badly needed public buildings.”

“Predictably, local redevelopment agencies are howling about what they see as an arbitrary raid on their funds. On closer examination, however, Schwarzenegger’s property tax shift makes a lot of sense…Any increases in property taxes are retained by the agencies rather than shared with counties, schools, and other local government entities.”

“The governor’s budget proposal would divert $10 million of the San Jose Redevelopment Agency’s tax increment revenues annually for three years. While this is 5% of our gross revenue, it is a much higher percentage of our net revenues after paying our debt service, obligations to the county, affordable housing fund, and other commitments.  Because the agency is able to bond its revenue at a ratio of 10 to 1 ($10 for every dollar of tax increment revenue) the total reduction is closer to 10 times that over three years.”

“The rub is that the state constitution requires that any losses of property tax to schools must be back filled from the state general fund, an indirect state subsidy for redevelopment estimated at $2 billion a year.  It’s simply irrational that state funds should underwrite auto malls, big-box retailers and other projects that local officials favor.”

“A common misconception is that redevelopment agencies underwrite auto malls or big-box retailers.  Redevelopment agencies use their resources for vital needs: infrastructure, affordable housing, and revitalization of rundown areas.”

Who do you believe?

(Sources: Mercury News 9/4/08 and 9/8/08)


  1. We’ve already talked on this site about how the RDA is just a big sinkhole that doesn’t even respond to community concerns. If they were to lose some money to the state, nobody would notice.

  2. “Who do I believe?”  That’s easy… Dan Walters, hands-down.  RDAs are, by their very nature self-serving beasts feeding on the public trough.

    It’s my thought that RDAs, statewide, have outlived their usefulness.  Over the years, they have become bloated and bureaucratic and, in the main, San Jose’s seems to serve at the pleasure of Downtown developers and investors.

    The economic stimulus provided by our RDA is negligible yet quite substantive revenues are diverted away from other mainline needs, e.g., schools.

  3. I believe as does Greg Howe #2 re SJRDA “Over the years, they have become bloated and bureaucratic and, in the main, San Jose’s seems to serve at the pleasure of Downtown developers and investors.”

    I am a critic of SJRDA and its bloated bureaucracy.

    Yet, in my opinion, Harry M. has the best of this particular argument.

    The state folks just steal from the local folks to fund their even more bloated bureaucracies.

    The California Legislators in the past 50 years have consistently passed laws requiring lower levels of government—particularly counties—to fund all manner of programs for which the state provides no SOURCE of funding, let alone actual funding.  It’s governmental bullying, and it needs to stop.

    Anyone for another Boston Tea Party?

  4. “A common misconception is that redevelopment agencies underwrite auto malls or big-box retailers.”

    Wasn’t it just last year they were boasting what a bang-up job they’d done with San Jose Market Center on Coleman, which consists primarily of big-box retail and fast food chains?

    There’s been a sign up for some time claiming that a bank is going in there, but no sign of any construction starting. Was it Washington Mutual they had lined up?

  5. #5: WAMU is already in the SJ Market Place, which does consist of big-box retail and fast food chains.

    It’s a shame that one of the “gateways to San Jose” wasn’t given more charm and character. It looks like just another strip mall replete with the maverick shopping carts (ending up in our parks) and a ton of litter (which blows onto streets and into the Guadalupe).  It does have a sound enhancement other strip malls don’t have (as much of)…the airplanes directly overhead flying into SJ Airport.  And while I’m on my soap box, rumor has it SJ RDA has their eye on an adjacent property for (you guessed it) MORE RETAIL. But this time it’s smack in my neighborhood’s backyard. Will the fun ever stop?

    Okay, I’m done.


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