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CRA Estimates Redevelopment Agencies' Price Tags for 'Two-Bill' Budget Strategy

Jun 21, 2011

The budget negotiations in Sacramento took a dramatic turn last Friday when Gov. Jerry Brown vetoed the Democrat-led budget that had been sent to him less than 24 hours before. Though it sends the parties back to the drawing board, the veto did not directly affect the so-called "two-bill" strategy that threatens to do away with, or possibly impoverish, many of the state's redevelopment agencies.

Two pairs of identical budget bills are under consideration in both houses of the Legislature. The first bill would eliminate redevelopment agencies while the second bill would spare them in exchange for voluntary payments to the state, totaling $1.7 billion in fiscal year 2011-12 and $400 million in 2012-13. The California Redevelopment Association analysis of AB1 27x, the Assembly version of the bill regarding voluntary payments, has estimated the burden on each of the state's nearly 400 redevelopment agencies. 

Agencies that wish to stay alive will have to write some fairly large checks relative to their total tax increment revenues. Calculated by the research organization Time Structures, Inc., CRA's estimates are based on agencies' 2008-09 revenues. As described in AB1 27x, the estimated 2011-12 payments are based roughly on agencies' respective percentage shares of statewide gross tax increments, multiplied by $1.7 billion and $400 billion. 

To cover the 2011-12 payment, the Los Angeles Community Redevlopment Agency--representing roughly 5% of statewide tax increment revenues--would have to pay over $97 million of its $265 million revenues in 2008-09. San Diego's redevelopemnt agencies would pay a total of $69 million. The San Jose Redevelopment Agency would pay roughly $47 million, while San Francisco would pay just under $25 million.

For 2012-2013, those numbers drop by roughly a factor of four. 

CRA has posted two spreadsheets calculating every agency's transfer payments for FY2011-12 [.xls] and FY2012-13 [.xls]. CRA notes that these figures are not official and are intended to be used only to guide agencies' planning processes. 

CRA and other opponents contend that, despite its the voluntary nature, the two-bill strategy violates Proposition 22's prohibition against the transfer of local redevelopment funds to the state.