Will Redevelopment Continue in Los Angeles?

Hollywood & Highland was a redevelopment project | Photo by Flickr user fujitariuji, used under a Creative Commons License.

In the wake of the California Supreme Court's recent decision regarding redevelopment agencies, many of those agencies are scrambling to determine how to stay in business.

As I previously wrote, the California Supreme Court upheld a statute eliminating redevelopment agencies. The court basically said that if the legislature has the power to create such agencies, they also have the power to end them. The court also struck down a law that would have allowed redevelopment agencies to stay in business if they transferred large sums of revenue to the state. The court found the law violated a recently enacted initiative that prevents the state from raiding local coffers.

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The California Supreme Court's ruling was the worst-case scenario for redevelopment agencies. Many supporters of the 400 redevelopment agencies around the state are now lobbying hard to somehow try to stay in business.

This week two analysts suggested that the Los Angeles City Council not take responsibility for the City's Community Redevelopment Agency because doing so would pose too many financial risks. Specifically, the analysts warned the City Council that it could be burdened with more than $100 million in costs associated with taking over the agency and its almost 200 employees.

However, one day later lobbyists strongly urged the City Council do the opposite and take responsibility for the agency by becoming the "successor" of the agency. Proponents claim that numerous important construction projects will fail to come to fruition if the City Council does not act.

The City Council faces a difficult decision. The economic downtown was the impetus behind Governor Brown's decision to end the redevelopment agencies and allow them to continue only if they agreed to make transfers to the state. The economy also likely contributed to the voters' passage of an initiative that prevents the state from using local revenue (in certain circumstances). Now the economic outlook of the city weighs heavily on the City Council's decision.

Can we afford to live with or without the Community Redevelopment Agency?

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