Economic Development

Calif. Cities Scrambling After State Law Eliminates Redevelopment Agencies

A new California law eliminating city redevelopment agencies could put dozens of projects in danger of being halted and lead to the layoffs of dozens of employees in Los Angeles, the Los Angeles Times reports.
by | January 11, 2012

A new California law eliminating city redevelopment agencies could put dozens of projects in danger of being halted and lead to the layoffs of dozens of employees in Los Angeles, the Los Angeles Times reports.

The Los Angeles City Council received a report Tuesday estimating that dismantling the agency, but retaining its employees and operations in other departments could cost the city up to $109 million in new expenses, according to the Times. "We can't afford it," City Administrative Officer Miguel Santana told the newspaper.

A committee that includes Mayor Antonio Villaraigosa and four council members recommended Santana begin laying off 192 redevelopment employees, according to the Times. Projects such as a "clean tech" business campus near the Los Angeles River and low-income housing projects near downtown and along Washington Boulevard could lose millions of dollars in funding, the newspaper reported.

Last year's law passed by the state legislature eliminated more than 400 redevelopment agencies statewide. Most of the $5 billion in property taxes that provided funding to those agencies will now be funneled to the state, counties and school districts. The law allows "successor" agencies to finish the projects already undertaken by the redevelopment agencies, but also requires them to sell off assets.

The California Supreme Court upheld the law in December after a challenge by the California Redevelopment Association and the California League of Cities, according to the Los Angeles Daily News. Gov. Jerry Brown praised the court's decision, saying that it "validates a key component of the state budget and guarantees more than $1 billion of ongoing funding for schools and public safety," according to the Daily News.

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