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CRA Proposes Compromise on Budget Plan

After weeks of stalemate and tough talk -- on both sides -- the California Redevlopment Association has announced an alternative to Gov. Jerry Brown's intention to eliminate redevelopment. The CRA announced today a compromise plan that would preserve the architecture of redevelopment while allowing the transfer of certain funds to schools (at the expense of affordable housing), thus easing the state's deficit.  

CRA Executive Director John Shirey said that the proposal does not yet have any sponsors in the Legislature but that feedback on initial drafts of the proposal had been positive. Shirey said that he expected the governor to be unyielding but hoped that legislators would be able to swap it into the budget bill in place of the governor's more draconian measure. 

Budget talks have reportedly stalled in Sacramento, with the governor attempting to garner support from Republican legislators. 

CRA officials say that their plan would comply with the state constitution -- particularly Prosition 22 --  by allowing voluntary contributions from redevelopment agencies. In doing so, the compromise plan presumably avoids the legal battles that would likely ensue if the governor's plan was adopted intact. 

The proposal includes the following two key provisions:

1) Local redevelopment agencies can voluntarily suspend their housing set-aside for FY 2011-12.  An equivalent amount of funds must then be contributed to local school districts in project areas. In exchange for this contribution of funds for FY 2011-12 to local schools, the agency will be allowed to extend the project area's life by two years.

2) In addition, or alternatively, redevelopment agencies could voluntarily contribute up to 10 percent of their tax increment revenue stream to local school districts for 10 years, beginning in FY 2011-12.

CRA estimates that the alternative could raise more than $2.7 billion over the 10-year life of the proposal, exceeding the $1.7 billion in the governor estimates that could be gained by eliminating redevelopment.

--Josh Stephens

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