Tax-increment financing isn't coming back anytime soon. But the state government hasn't squeezed as much money out of redevelopment as expected. So what happens next? What tools does the state provide to California's local governments to stimulate new development – especially infill development, which the state is trying to encourage through policies designed to decrease greenhouse gas emissions and achieve other goals?

The short answer is not much – at least not compared to redevelopment, which at its peak provided local governments (mostly cities) with $6 billion a year for urban projects. But a more nuanced answer would be that the state is now doing lots of little things – some formal, some informal – to try to give the locals some running room.

In vetoing the latest tax-increment revival bill (see http://www.cp-dr.com/articles/node-3586), Gov. Jerry Brown made it clear – for the third year in a row -- that he has no interest in permitting redevelopment to rise from the grave. There has always been a theory (floated by me among others) that tax-increment revival would be a second-term Jerry Brown thing, but given Brown's animosity toward the League of Cities and his general stubbornness, this seems unlikely. Furthermore, Senate leader Darrell Steinberg – urban development's most effective advocate in the Legislature and one of the few in Sacramento who could go toe-to-toe with Brown – is now termed out, and Redevelopment has no obvious new main legislative champion in the wings.

Of course, the Brown Administration is currently ramping up the Affordable Housing and Sustainable Communities program, which will expend the Strategic Growth Council's cut of the state cap-and-trade money. That means $130 million in the first year will be pushed out the door, mostly to fund affordable housing and infrastructure projects that support smart growth goals. (See coverage in this issue.) And the number could go up to several hundred million dollars annually in the out years. It will be the biggest infusion of cash into urban development that we've seen since Brown took office. But it's still just a fraction of the amount redevelopment provided.

Meanwhile, the redevelopment wind-down front is settling down a little. The state is actually winning most of the hundreds of lawsuits filed by cities. (See http://www.cp-dr.com/articles/node-3575.) The cities have consistently argued that they should regain control over a wide variety of redevelopment projects and tax-increment revenue flows – and they have mostly lost. Even so, post-redevelopment experts say the state windfall of $1.7 billion per year that was expected a couple of years ago simply isn't materializing.

In part, that's because successor agencies – guided by AB 1484 – have taken a cautious approach to selling former redevelopment agencies' real estate assets. Instead of taking a "fire sale" approach as originally required by the redevelopment dissolution bill, agencies are now preparing "Long-Range Property Management Plans" that focus on the orderly development or sale of assets over time. This will probably produce substantial long-term benefits for all taxing agencies concerned – including the cities that used to have redevelopment agencies – but it hasn't created a lot of short-term cash. As Nossaman lawyer Rick Rayl said at the California Chapter, American Planning Association, conference, last month: "The assets have produced a lot less than anyone ever thought. If you asked Gov. Brown, he might second-guess the whole decision. I don't think it has accomplished what he intended."

That I'm not so sure about. It's not like Brown to admit a mistake, especially a high-profile one. But the bottom line is that if the end of redevelopment isn't producing as much cash for the state as Brown thought, it doesn't really matter. Between an improving economy and the temporary tax increase he secured in last year's election, his problem is not how to cover a deficit. It's what to do with a surplus.

Which leads me to think that what's really happening – informally, with a law or an executive order or any formal policy direction – is that the Department of Finance is beginning to ease up on its demands to repurpose ex-redevelopment funds. Yes, the hundreds of lawsuits will continue to drag on – many of them are now pending in the appellate court. Yes, long-range property management plans will work their way slowly – very slowly – through the system. And yes, DOF will continue to drive successor agencies crazy with opacity and resistance every day on issues large and small.

But DOF also seems to have figured out that, as a general principle, holding things up doesn't do anybody any good – least of all the state general fund. The greatest asset that former redevelopment agencies had in the bank when the program was killed wasn't real estate owned or cash in the bank. It was the potential upside of pending redevelopment projects then in the works. And the longer those holes in the ground sit there, the less money the state, the cities, and the other taxing entities will get in the long run.

I'll tell one war story from my time in San Diego to make my point. At the time redevelopment was killed, Center City Development Corp. and Westfield were working on renovating Horton Plaza Park, outside the famous shopping center downtown. The project got caught up in the redevelopment wind-down and it was literally a hole in the ground with a tarp around it the entire time I worked in San Diego. But during that time, the successor agency and DOF successfully worked through two problems that were holding the project up – first, the transfer of the property from Westfield to the successor agency, and, second, the allocation of additional funds to finish the project when the bids came in higher than expected.

At the beginning of redevelopment wind-down in 2012, you might not have seen much cooperation from DOF. But eventually DOF apparently realized that the value of the successor agency's real estate assets – including the park itself and whatever benefit might be derived from a long-delayed renovation of Horton Plaza itself – was likely to increase more and faster if the project moved along.

All this doesn't mean that Brown will back off of his resistance to tax-increment financing in his second term, and as I said before it's not likely to end the distrustful dance between successor agencies and DOF. But it does mean that – now that the state has the luxury of focusing on long-term asset value rather than short-term cash --  longstanding redevelopment projects throughout the state will have an easier path to completion.