L.A. Considers Using Post-Redevelopment Funds for Economic Development

 

A couple of months ago, we reported on four post-redevelopment models emerging in California, based on a presentation by Paul Silvern of HR&A: Alhambra, Oakland, San Diego, and Los Angeles. Now Silvern and his colleagues at HR&A -- along with ICF and Renata Zimril -- have proposed a whole new post-redevelopment economic development structure for Los Angeles.

Unsurprisingly, the recently released HR&A report -- commissioned by L.A.'s chief administrative officer and chief legislative analyst -- calls for the creation of a consolidated Economic Development Department. But if the proposal is adopted by the city, it would represent revolutionary change for a city that has long been characterized by a large, sluggish bureaucracy that has difficulty being nimble enough to compete on economic development.

Perhaps most interesting is how HR&A proposes to fund the new operation: With the money the city now receives in its general fund because redevelopment was killed. One oft-overlooked point about the end of redevelopment is that it created a "windfall," if one might call it that, for city general funds. Redevelopment agencies typically received somewhere between 60% and 100% of property tax increment from inside redevelopment project areas. Now that the money is distributed to taxing agencies just like all other property tax money, cities are getting about 15% of it into their general funds.

For the City of Los Angeles, that's about $20 million a year.

Most cities will no doubt vacuum up this new revenue and use it to keep the police department whole or pave more streets. But a few cities -- and apparently Los Angeles is among them -- are viewing these funds as possible seed money for a new, post-redevelopment economic development effort.

HR&A's report also calls on the city to:

-- Reposition economic development as a high-priority citywide effort that isn't so bogged down in the politics of city council offices or the regulatory churning of the city bureaucracy.

-- Create the position of deputy mayor for economic development.

-- Spin off a citywide economic development nonprofit that will have more flexibility to do deals than the city government.

-- Manage the city's real estate assets more strategically, either to generate revenue or maximize their value in creating new economic activity.

HR&A looked at lessons learned from eight recognized leaders in economic development, including two in California -- San Diego and San Francisco.

No other city in California is Los Angeles, of course. But the HR&A report provides some interesting fodder for the ongoing discussion in local circles around the state about how to maintain a viable economic development effort in the post-redevelopment era.