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Against all odds, redevelopment isn't quite history yet in California. Some projects continue. Most cities are engaged in a long wind-down process that is consuming considerable time and attention. And the state legislature is considering a variety of options to revive redevelopment, or at least get it back on life support. The current activity falls into four categories. First, there is the winding down of old redevelopment projects and disentanglement of municipal and RDA resources and staff. Second, there are the looming negotiations between the "successor agencies" (mostly the cities) and the "oversight committees" (controlled by schools and counties) over which projects can continue and how much property tax increment can be devoted to those activities. Third, some cities are attempting to cobble together alternative strategies to promote urban development. And finally, there are the surprisingly active attempts by the legislature to bring redevelopment back in some form. The wind-down of the old agencies has been painful for cities because redevelopment had become so deeply embedded in the structure and budget of almost every municipality in the state. Although redevelopment agencies were technically separate entities – and, in a few cases such as Los Angeles, operated as such – in the vast majority of cases, these agencies were a seamless part of the city government. The City Council served as the redevelopment board, the city manager served as executive director, and so forth. Although this integration made sense in terms of operational efficiency – especially for smaller cities – the real reason was financial. By integrating the RDA into the organizational structure, the city could use redevelopment funds to pay for personnel and activities that would otherwise have to come out of the general fund. Not only were redevelopment personnel paid for by redevelopment funds, so were many other staff. City managers and community development directors were often paid partly out of redevelopment funds. Public works engineers would charge their time to redevelopment projects. In Oakland, 17 police officers were being paid out of redevelopment funds. Thus, disentangling redevelopment from regular city operations has been difficult for many cities.  So too has the process of determining which activities can continue . At first, the redevelopment establishment assumed that all activities could continue so long as they were funded with bonds that had already been issued. But the California Department of Finance soon issued strict guidelines saying that just because the RDA had floated bonds, that didn't mean the activities could continue. In many cases, the Department of Finance suggested, design contracts should be terminated mid-stream and bonds should be "defeased" (backed by other city assets rather than RDA assets) or paid off. AB 1X 26 called upon the sponsorship entity to make a choice to designate itself as the successor agency to oversee the wind-down. Most cities did so, though a few – including Los Angeles – did not, meaning Governor Brown had to appoint a panel to serve as the successor agency. In most cases, successor agencies are currently trying to figure out how to persuade everybody else in the process to take a broad view of which obligations should be honored and, therefore, which redevelopment projects can continue to move forward. This process is likely to take two forms – negotiation and litigation.  On the one hand, successor agencies will likely press hard to persuade oversight committees that everybody will be better off financially in the long run if promising RDA projects are allowed to proceed. Even if the oversight committees buy this argument, however, the Department of Finance will be looking over everyone's shoulder and could reverse an oversight committee's decision. On the other hand, there is little question that California will see a raft of litigation over this issue in the next couple of years. Cities will argue that the county auditor and oversight committee didn't properly accept their list of enforceable obligations; they will also argue that they can't defease the bonds. It will be quite a while before all this gets sorted out in court. So redevelopment personnel may have been laid off, but redevelopment consultants and lawyers will do just fine. Meanwhile, cities are scrambling to find ways to keep doing redevelopment projects in the absence of the redevelopment law. First out of the gate was the inner-ring Los Angeles suburb of Alhambra , which adopted a local ordinance that gave the city many powers the redevelopment agency formerly held, including the power to buy and sell land for economic development purposes and provide financial assistance to developers. Many of Alhambra's ideas involve taking activities the city was already involved in – community development block grants and disposing of surplus property, for example – and using those activities in a focused way to continue redevelopment projects. Other cities are likely to follow suit, using sales-tax rebates more aggressively, donating city-owned land to projects, and so forth. Perhaps most surprising, however, has been the amount of activity in the legislature on the redevelopment front. Whether Governor Brown signs any bills is an open question, but both houses of the legislature have been actively pursuing redevelopment proposals.  Few legislators who voted on the redevelopment package in 2011 actually expected redevelopment to be killed. They thought they were voting on a complicated workaround to take more funds away from redevelopment agencies and still conform with Proposition 22, the 2010 ballot initiative sponsored by the cities and redevelopment agencies designed to create a firewall between the state and redevelopment funds. Still, the fact of the matter is that the RDAs had no friends in 2011 – and they do have some friends in 2012. Legislation has dealt with three issues. The first is affordable housing. When redevelopment was killed, there was $1.3 billion in uncommitted affordable housing money sitting in RDA accounts. It seems likely that the legislature will pass – and the governor will sign – legislation allowing cities to keep this money to use for affordable housing. (Update: The governor's May revise appropriates this funding.) The second issue is the other assets that were held by RDAs when they went out of business. RDAs had at least $2 billion in cash in the bank, plus – most likely – billions more in real estate assets. Many cities claim the real estate isn't very valuable, but it's hard to know for sure; the Los Angeles Community Redevelopment Agency had 400 properties in its portfolio. Darrell Steinberg, the head of the state senate, has proposed allowing cities to keep the assets as an endowment for future redevelopment activities. In theory this is a viable idea – after all, the fight in the legislature was over the ongoing flow of property tax revenue, not the assets – but either the legislature or the governor may well decide to lay claim to the money to balance the budget. The third issue is – believe it or not – bringing back the tax-increment financing system in some form. A variety of ideas have been floating, most notably allowing cities to do tax-increment financing with city and county property tax funds so long as counties agree to the idea. In theory, this too should be a viable idea, since it does not touch the property tax revenue that flows to schools. (The state must backfill property tax revenue lost to schools out of the general fund). Governor Brown has said that he would consider any redevelopment proposal that does not affect the state general fund, but it may be that 2012 is just to soon to bring back tax-increment financing. Brown may want to wait till the redevelopment carcass is colder. One thing is sure: government involvement in building urban infrastructure and subsidizing urban development is likely to return in California in some way. The state's entire policy apparatus, including the regional planning law Senate Bill 375 , points in that direction. And Governor Brown has been supportive of the policies. The question is whether – or how soon – bringing back some limited form of redevelopment will be politically acceptable.

Now that the California state budget is mostly out of the way, it's time to see what – if anything – the state will do this year to plug the redevelopment gap. And as redevelopment bills move forward, it's pretty much shaping up like this: The legislature is likely to pass something. The question is whether Gov. Jerry Brown will sign anything. So-called "policy" bills were required to clear their house of origin in the legislature by June 1. For the most part, the redevelopment-related bills sponsored by the two legislative leaders – Assembly Speaker John Perez and Senate President Pro Tem Darrell Steinberg – cleared their own houses and are now awaiting a hearing in the opposite house. It's pretty clear that some package of bills will wind up on Brown's desk in September. In general, there are three types of bills: The first set of bills deals with affordable housing. The second would bring back tax-increment financing in some form. The third would replace tax-increment financing with some other funding source. Especially with the second and third types of bills, there's a clear trend: Tie the funding opportunities to the regional sustainable communities strategies that are being created under SB 375, Steinberg's regional planning/greenhouse gas emissions reduction bill. Each leader got an affordable housing bill through their own house – AB 1585 for Perez and SB 654 for Steinberg. In different ways, both bills try to protect the 20% affordable housing setaside money that was part of the redevelopment system. Both bills seek to ensure that about $1.4 billion in "unencumbered" affordable housing money that was sitting in redevelopment agency bank accounts on February 1 stays with housing agencies, rather than being distributed to all local government agencies for general purposes. The second set of bills – which would create a new, much more focused redevelopment effort – is the centerpiece of Steinberg's efforts. SB 1151 and SB 1156 would construct a replacement system for redevelopment, requiring more cooperation with counties and tying those efforts to implementation of sustainable community efforts. These "asset bills" are probably the most controversial redevelopment bills – and the ones that would seem to stand the least chance of success. Nevertheless, Steinberg – who has made no secret of his commitment to redevelopment – is pushing them hard. Both bills target assets formerly owned by redevelopment agencies – possibly as much as $2 billion in cash and an undetermined amount of value in real estate assets. SB 1156 would allow cities and counties to jointly create a "Sustainable Communities Investment Authority," which could pursue activities under the old redevelopment law. But this arrangement would not require a finding  of blight. Rather, the new authority could pursue transit- and pedestrian-oriented developments that conform with the regional sustainable communities strategy adopted under SB 375.  SB 1156 would allow the use of the city-county portion of the tax increment to be dedicated to redevelopment, thus holding the state harmless because school property taxes are not included. SB 1151 would allow these authorities to also use the assets that redevelopment agencies had on hand on February 1. There is considerable debate as to whether RDA real estate assets were worth much by the end because so many RDAs transferred assets to their host city government in 2011. Steinberg managed to get both 1151 and 1156 out of the Senate before the deadline for policy bills at the end of May. The vote was fairly close – 22-15 in one case and 21-15 in the other. And it was mostly a straight party-line vote. All the yes votes were Democrats and all the no votes were Republicans except for two -- Democrats Lou Correa of Orange County and Rod Wright of South Los Angeles, both of whom often move in a conservative direction on sustainability issues. In theory, 1156 should not be objectionable, since it holds the state financially harmless and creates a voluntary process that requires county consent. But you never know. 1156 theoretically takes money that could be used to plug the state budget deficit. The final category of bills involves so-called "new money". The first is AB 1532, the bill that will dictate how money derived from the state's new "cap-and-trade" greenhouse gas emissions reduction program will be spent. The bill – sponsored by Perez – would allow the money to go to public transportation and local sustainability efforts – again, if they conform to the sustainable communities strategy. The bill seems likely to pass. The second bill is AB 2144, also sponsored by Perez, which would make it easier for local governments to set up an infrastructure financing district as an alternative to redevelopment. IFDs date back to the ‘90s. They permit the use of tax-increment financing for public infrastructure – but only with 2/3 voter approval. This bill would cut the approval required to 55%, as with school bonds. The new bill is especially targeted as military base reuse. It may well be that Jerry Brown still believes that the redevelopment carcass is not cold enough and therefore won't sign any bills at all this year. But at least the legislature is going to give him some proposals that meet the criterion he laid out in January – that the state budget be held harmless. We'll see what he does.

The Legislature and Gov. Gavin Newsom have punched another hole in the California Environmental Quality Act – this time in order to move along construction of a new annex to the State Capitol in Sacramento.

Six months after it came, the U.S. Supreme Court’s ruling in the Sheetz case is beginning to have an impact on land use planning in California. But – typical of Supreme Court rulings these days – Sheetz leaves a lot of question unanswered and practicing planners and land use lawyers are still wondering, or maybe hoping, that future court rulings will clarify things. Sheetz overturned California’s longstanding Ehrlich doctrine, which said that if exactions and impact fees are adopted as part of a legislative decision such as a General Plan update they don’t have to follow the “rough proportionality” rule of the so-called Nollan/Dolan legal doctrine. That doctrine, which emerged from the U.S. Supreme Court rulings in the Nollan  and Dolan cases, says that exactions must be both reasonably related and roughly proportional to the impact of a development . But California had stubbornly held on to the Ehrlich doctrine, which constituted an exception to the rule. The Sheetz case – involving a traffic impact fee imposed on a homeowner in El Dorado County – struck down the Ehrlich doctrine. ( CP&DR ’s coverage of the Sheetz ruling can be found here .) Unfortunately, the court didn’t say what California jurisdictions should do instead, which led to a wide variety of interpretations. More than one planner has reported that, starting the day after Sheetz was issued in April, developers started calling up and saying they didn’t have to pay impact fees anymore. The big question is whether California’s method of calculating fees – essentially by using an average – conforms to the Sheetz ruling. As we explained last spring here , the typical exaction or impact fee regime spreads the cost of infrastructure and other impacts evenly across all development – essentially dividing the cost by the number of units (or the square footage) to arrive at a number. This is essentially what El Dorado County did in the Sheetz situation. But are averages okay? Or must cities and counties actually engage in what the Supreme Court has called an ‘individualized determination” for, say, every single home or building in the entire jurisdiction – a huge departure from the past practice of averaging? At the California Chapter, American Planning Association, conference in Riverside last month, several practitioners had some preliminary answers. But everybody agrees that more clarification from the U.S. Supreme Court – or other courts in California – would help a lot. “What we don’t know is whether … in 3-4 years we’ll get a new clarification ,” said Teifion Rice-Evans, a managing principal with EPS. The consensus was that there’s probably some middle ground between the current practice of averaging and the “individualized determination” the Supreme Court might have in mind. “The question is whether a permit condition imposed on a class of properties must be tailored with the same degree of specified as a permit condition that targets a particular development,” said Lufti Kharuf, an attorney with Best Best & Krieger. Referring to a concurring opinion by Justice Neil Gorsuch, Kharuf added: “Gorsuch suggested yes, but no other justice joined him.” Among the suggestions from the panel were:

Anecdotally, the answer is clearly yes. But it's a little hard to say based on the data that's available.  The Great Inversion  is the title a new book by Alan Ehrenhalt, the longtime editor of Governing magazine and author of several insightful books about cities. (Disclosure: Ehrenhalt was my editor at Governing for 20 years.) Ehrehalt's thesis is that American cities are becoming more like European cities, with the rich folks living at the center and the poor and working-class folks living on the edge. The book includes case studies of more than a dozen American cities – but none from California. Adding to The Great Inversion publicity was a recent, highly publicized study by William Frey, the noted demographer at the Brookings Institution, who concluded that cities grew faster in population than suburbs between 2010 and 2011. Frey's study included 51 metropolitan areas with a population above 1 million people, including California's "Big Four" metros – Los Angeles, San Diego, the Bay Area, and Sacramento. Frey's implication – repeated ad nauseam by urban boosters in the Northeast and Midwest – is that, after 60 years of population decline, older central cities are finally adding people. And, by extension, wealth and vitality as well. This phenomenon is clearly true in the older cities. Washington, D.C., for example has added close to 10% in population since 2000. So has Philadelphia. These population increases were unimaginable a decade ago, and the resulting vitality in city neighborhoods is palpable. But California, as usual, is an anomaly, for several reasons:  First, our central cities have not been losing population over the past several decades. To the contrary – they've been gaining population, primarily because of immigration from other countries. Second, unlike in the Northeastern and Midwestern cities, an increase in population does not necessarily mean an increase in wealth. New city residents in California have generally been poor immigrants living in old, high-density neighborhoods. These neighborhoods are now vital – but they are not rich. And third, California defies conventional city-suburban categorization. Yes, you can try. But it is necessarily a coarse measurement. For example, the City of Los Angeles includes some very suburban areas in the San Fernando Valley – while unincorporated L.A. County includes some very urban areas in East and South L.A. Still, some trends are obvious. Population is dramatically on the rise in places like downtown San Diego and downtown Los Angeles – traditional business districts that have recently added a large number of housing units. In San Diego, the addition has come about mostly through new construction; in L.A., by converting old office buildings into lofts and apartments. The results are significant. The population of Downtown L.A. has grown from about 10,000 to about 50,000 in the last 10 years.  It's fashionable to pooh-pooh the downtown numbers as statistically insignificant. At least in L.A.'s case, they're not. The population of the entire City of L.A. – approaching 4 million residents at this point – has grown by a little over 100,000 in the last decade. And somewhere between a third and half of that growth has occurred downtown. In a metro area of more than 15 million people, an increase of 40,000 might seem like a drop in the bucket. But when concentrated a small, job-rich and transit-rich area, it can make a huge difference in the way the region functions. Larger population trends suggest that most of California's big cities are at least holding their own in terms of population. And one thing that you can say about California's big cities is that they are far older and more urban than their suburban counterparts. For example, in the 2010 census, California counted 18 cities with a population of 200,000 or more – a pretty good definition of a big city. With the exception of Irvine, virtually all of them are older, gritty cities – including both recent cities to declare bankruptcy, Stockton (population 292,000 in 2010) and San Bernardino (population 210,000). Not all of these cities showed significant population gains between 2000 and 2010 – Santa Ana lost population (suggesting a leveling off of Latin American immigration) as did Oakland. Long Beach held even. Anaheim and Los Angeles showed modest gains. Only Irvine, Chula Vista, and inland cities saw significant increases. For a lot of these cities, the decennial numbers hide a big run-up in population in the first half of the decade because of the housing boom, followed by a significant decline in the second half of the decade after the bust. But for the period 2010-2011 – when Frey identified the overall trend nationwide – virtually all of these cities mirrored the national trend. Of the 18 cities in California with a population of more than 200,000, 15 grew faster than the state average – a remarkable feat in a state where population growth has been predominantly suburban for 70 years. The only three that grew slower than the state average were San Francisco (which still added 7,500 people), Los Angeles (which added 23,000), and Long Beach (which added 3,000).  In fact, even though overall state population growth in 2010-2011 was less than historic levels, all large – and, for that matter, medium-sized – cities gained population. The largest city in the state with a stagnant population for the year was Eureka in Mendocino County, which lost exactly one of its 27,318 residents. The largest city with a noticeable population loss was Susanville, in Lassen County, which lost close to 300 residents out of a population of about 17,700. Indeed, if there is a larger trend here, it is that the small cities are the ones losing ground in the California population competition these days. California cities below 50,000 – and especially those below 25,000 – are adding population at less than one-tenth the rate of larger cities.  Of course, none of these statistics can quantify the quality of urban life and whether it's getting better for California city residents, whether affluent or poor. But one thing is clear: in keeping with the national trend, Californians are increasingly choosing to live in cities and especially in large cities. The bucolic suburb no longer appears to be the destination of choice.

Last week I published a short op-ed in the Los Angeles Times suggesting that low-density development patterns are one of the reasons California cities are experiencing fiscal problems. But I have to admit I wasn't prepared for the type of pushback I got from readers, most of whom seemed to view me as an apologist for public employee unions or as a radical wishing to overturn Proposition 13. I tried to be careful about how I made my case–acknowledging that public employee pensions are a huge issue no matter what and also acknowledging that Stockton, in particular, made their problems worse with grandiose urban redevelopment projects. I made a particular point of the fact that, under Proposition 13, the buying power a city gets from a new development project declines over time, especially in relation to the cost of servicing the project. I borrowed this point from a talk I once saw given by Mike Multari, the former San Luis Obispo city planning director and longtime partner in Crawford Multari & Clark. Mike used to draw a chart depicting the revenue-cost curve of a typical development project over time, showing that eventually there's a crossover where the project runs a deficit. (I've replicated The Multari Curve crudely here.) Mike's point was that most of a development project's revenue bump comes at the beginning, with impact fees and a big increase in property tax, but the impact fees go away and after that property tax increases slowly because property isn't reassessed unless it is sold. His point was that the only way to cover the gap was to keep approving new projects and get a new "hit" of revenue. And it all comes crashing down when the new projects stop coming. Which is what happened in 2008. I guess I expected that some people wouldn't believe all this and suggest, instead, that sprawling development projects do make money for cities. Naively, I didn't expect anything else. The blowback  to the piece came in several waves. First were the online comments posted underneath the piece itself. My article was called everything from "baloney" to "fatuous nonsense" to "commie propaganda." Several people pointed to sprawling, non-union Texas as proof that I am wrong, as cities there are doing fine compared to cities in California (which, by the way, isn't true). Substantively, most of the comments were variations on the following themes: 1. I'm an apologist for public employee unions claiming that pensions aren't a problem. 2. I'm trying to divert attention from my own dismal record as a tax-and-spend liberal on the Ventura City Council. 3. I'm one of those crazy people who think Proposition 13 should be repealed. None of which I said or meant to imply in the article. Then came my appearance on Larry Mantle's normally thoughtful Air Talk show on KPCC . In the interest of balanced journalism, Larry recruited anti-anti-sprawl economist Wendell Cox to refute me. I like Wendell personally, but I don't care much for his research; in fact, I have devoted considerable effort on CP&DR blog space to tearing it apart. Wendell predictably argued that I was wrong but then, as he typically does, blamed everything on restrictive land-use regulation. I agreed with him that land-use regulations are often too restrictive and lock in large-lot zoning where it is unnecessary. Then at the very end of the show Wendell circled back to attack SB 375 and the horrors of 30-unit-per-acre zoning (imagine!). I wanted to reply by saying the market's going in that direction anyway – something Wendell and the other pro-sprawl economists stubbornly refuse to believe -- but Larry was pressed for time. Subsequently Wendell emailed me in very gentlemanly fashion, so I asked him if he agreed that the market was changing. He said that trying to predict the housing market today would be like trying to predict it in 1931 – his way of saying that the economic downturn has so skewed the market that you can't tell how it will turn out in the end. Sometimes I wonder whether these pro-sprawl guys have any Millenial kids. And what does all that have to do with the question of whether sprawl costs money? Then came the L.A. Times letters . As it turns out, nowadays not only does the L.A. Times publish online comments and letters in the paper but they have a whole separate online section called Postscript, in which  the author gets to respond to a letter-writer. They gave me two choices, and I chose to respond to Sidney Anderson of Mission Viejo , who said I was only half-hearted in my criticism of pensions and also claimed that I was in favor of repealing Proposition 13, which he claimed had saved his house. "Prop 13 and Sprawl. Sure." I responded by saying I actually agree with Mr. Anderson on pension reform and that smart growth can help balance a city's budget within the constraints of Proposition 13. But even this wasn't the end of it, because both the interchange with Sidney Anderson and several other letters appeared on the Times web site and in the newspaper, generating even more comments, which – for better or worse – I responded to, thus getting into the weeds of how cities are hemmed in by state pension laws. Which is not exactly where I expected to end up. I'm happy that the piece attracted so much attention and comment. I don't expect people to accept everything I say, but I didn't expect all the curves I've gotten in the last week. But one thing I have learned: A picture really is worth a thousand words. So in the future, in order to make my point, I'm just going to draw The Multari Curve.

DUBLIN, Ireland -- Mike McKeever and I traveled 5,000 miles east from California this week to debate SB 375 in front of a Trans-Atlantic audience of planning and policy wonks at University College Dublin. Characteristic of how we each look at things, when we sit down to answer questions, my water glass was mostly empty and his was mostly full. My presentation focused on the background of AB 32 and SB 375 and the challenges associated with implementing the regional Sustainable Communities Strategies, such as the one adopted by the Sacramento Area Council of Governments, of which McKeever is the executive director. The American sponsors of the symposium were the National Center for Smart Growth at the University of Maryland and the Lincoln Institute of Land Policy . My bottom line was this: Under SB 375, neither the state nor the regions can coerce local governments to follow the SCSs; and it's unlikely there are enough financial inducements available – especially with the loss of redevelopment – for the state and the regions to compel the locals to do the right thing. That leaves what I call nudging. Using the financial inducements that are available – including transportation investments – and the general flow of policy, the state and the regions will have to nudge local governments to move in the right direction. Yes, my presentation (which otherwise included the requisite Schwarzenegger action-hero images) ended with an homage to Monty Python. (Nudge, nudge, wink, wink, know what I mean?) Mike McKeever, as I acknowledged in my presentation, is one of the great planning nudges of all time.  McKeever, to his credit, was not nearly as glib and cynical as I was. But his bottom line was that you have to trust local elected officials to understand that smart growth policies are in their best interest. You need not assume that you have to muscle the locals from above because they're too stupid or parochial to figure this out. "If you can't win the hearts and minds of local leaders, you're never going to effect change," he said. As a former local elected official, I couldn't agree more. After spending two days listening to presentations about state and regional planning efforts throughout the United States and Europe, McKeever made two good points: 1. A state planning law like SB 375 actually creates and stimulates a discussion about planning goals and planning implementation that can elevate local electeds out of their parochialism if it's managed well. He pointed specifically to the SB 375 debate at the Southern California Association of Governments as an example.   2. States and the federal government should rely more on performance standards and allow regions and locals more flexibility in meeting goals. He posited that this approach could be tested usefully if Obama is re-elected. I could add, this could be equally true even if Romney is elected and somehow tries to make the Partnership for Sustainable Communities work from his perspective. Of course, Mike and I had this debate on the very day that the Irish government announced a massive consolidation/reduction of local government and rearrangement of both local planning power and state infrastructure power so that it is exercised at the regional level. But we're not tempted by all this. It's time to come home.

When Jerry Brown first proposed killing redevelopment -- back in January 2011, when he released his first budget -- he said he would replace it with some other economic development tool. After Brown succeeded -- when he released his second budget, in January 2012, just days after the Supreme Court killed redevelopment – his tune changed, ever so slightly. He said he would consider bringing redevelopment back if it didn't affect the state's general fund. Fair enough. Last month, however, Brown vetoed several bills that would have brought redevelopment back in some form but would not have taken any money from the general fund.   What gives? The answer is simple: Brown has decided that the gradually decomposing dead body of redevelopment isn't cold enough yet. Despite his steadfast rhetorical support for the revival of some kind of redevelopment tool, Brown has pretty consistently sent the message that the body of redevelopment has to be cold, deep in the ground, and long turned to dust before he approves a replacement. He wants, essentially, for the former redevelopment apparatus to scatter and the old assumptions and habits to slip into the history books. The September vetoes simply reaffirm his position. But it's hard to say how long we will all have to wait. Will he sign something in 2013? He might have that chance, since Senate leader Darrell Steinberg has already vowed to introduce a version of his SB 1156 – which amounted to a semi-revival of redevelopment, with a smart-growth twist – on Day One of the next legislative year. Or, will Brown wait until his second term, if there is one? Will California's cities have to wait until he's out of office altogether -- an event that is somewhere between two and six years away? Nobody really knows. You'd think he's feeling some pressure to do something. After all, his determination to keep redevelopment underground for the foreseeable future is at odds with his own rhetoric about building a sustainable California. Even Brown seems to recognize this. In his veto message for SB 1156 he wrote: "The planning and investment that is envisioned in this bill would help develop and redevelop a California that is thriving." Not a surprising statement. After all, the bill explicitly tied new redevelopment efforts to implementation of SB 375, the 2008 regional planning law designed to implement the state's climate change law. Brown is passionate about the climate change issue and, in inheriting SB 375 from the Schwarzenegger years, he has made it a centerpiece of his growth policy, which is being implemented primarily through the efforts of his Strategic Growth Council. And although SB 1156 would have revived tax-increment financing in a limited way, the bill would not have included property taxes that flow to schools, meaning the state general fund would be held harmless. Yet Brown vetoed the bill anyway. He said he wanted to wait until after the redevelopment wind-down process is complete before considering new approaches like that contained in SB 1156. Brown used similar reasoning in rejecting AB 2144 by Assembly Speaker John Perez, which would have made it easier for local jurisdictions to create infrastructure financing districts. He said he did not want the locals to "focus" on IFDs while winding down redevelopment. It's hard to know whether Brown is using his veto power to punish California cities for their recalcitrant approach during the 2011 budget negotiations--but it's possible. As you'll recall, he proposed killing redevelopment only two months after the cities won passage of Proposition 22, a constitutional amendment that prohibited the state from raiding redevelopment funds to balance the budget. The cities subsequently chose not to negotiate on redevelopment -- and eventually lost a big gamble when the Supreme Court ruled against them in a lawsuit they brought, citing Prop. 22's provisions in killing redevelopment altogether. Punishment aside, there is a certain logic to Brown's approach -- if you accept the premise that the state's goal should be to protect the general fund at any cost. Cities engaged in the wind-down process are currently negotiating with their Oversight Committees to determine which old redevelopment projects should go forward -- and how much tax increment should continue to flow to those projects, as opposed to the general funds of local taxing entities. While cities and Oversight Committees are working well together throughout the state, the state Department of Finance is often using its power to hinder or block the resulting wind-down plan.  Given DOF's hard-line approach, you can imagine how Steinberg's bills might look to the Brown administration: Say some city has successfully negotiated a wind-down plan that essentially keeps a redevelopment project afloat, at least in a limited way. Then the city negotiates with its county under SB 1156 to create a new tax-increment flow to further augment the project, and possibly takes an infrastructure financing district to a vote. Before you know it, the local redevelopment agency is back in business -- through a patchwork of wind-down money, SB 1156 increment, and possibly IFD funds.  In and of itself, that's not something that would concern the state. But if this happens in enough cities, then redevelopment as an industry begins to emerge once again -- with the consultants, the lawyers, the developers, and maybe even a trade association. And before you know it, the redevelopment industry is lobbying to restore tax-increment financing on a larger scale -- even if it means grabbing a piece of the state's general fund. OK, not likely. But this is clearly the scenario that the Brown administration wants to avoid. Which is why the death of redevelopment isn't enough and the carcass has to decompose before Brown will consider something new. Cities would be in a stronger position to bring redevelopment back if they could argue that all entities that receive property taxes -- and the state itself -- would increase their coffers if tax-increment financing were revived. After all, that was the argument the redevelopment industry always made before. But there was always little hard evidence that the diversion of $6 billion in property tax funds generated a strong return on investment for local agencies; and the big drop in property values during the real estate bust has killed that argument altogether. So maybe those interested in reviving redevelopment need to take a different, more comprehensive approach. The Brown Administration appears committed to the implementation of SB 375 and to a general strategy of encouraging compact development patterns, often around transit stops. Maybe a limited revival of redevelopment -- meaning, yes, tax-increment financing -- should be viewed as part of a broader effort to implement SB 375, along with all those Proposition 84 planning grants, CEQA exemptions for infill development, housing elements that encourage upzoning around transit stations, the remaining infill funds from the 2006 housing bond, and a whole variety of other implementation tools. It might even turn out that redevelopment -- targeted properly to true infill locations, especially those that are transit rich -- will save the state enough money in other costs to please the beancounters and undertakers alike.

Last week, i n my Insight column available to CP&DR subscribers, I suggested that there were two possible reasons Gov. Brown vetoed SB 1156 and the other redevelopment bills. First, there's still bad blood between him and the cities. And second, he doesn't want to do anything that would stimulate the revival of a redevelopment lobby in Sacramento. Yesterday, at a redevelopment panel at the American Planning Association, California Chapter, annual conference -- they're calling it APACA now, not CCAPA -- San Jose Planning Director Joe Horwedel reminded me of another possible reason, related to the first two: Brown does not want to bring back redevelopment unless it's accompanied with very strict state oversight as to how tax-increment money is used. Horwedel's point was a good one, because -- in my view -- this was one of the biggest sticking points between the state and the cities. Most other states have very strict oversight of tax-increment financing; some even have a statewide cap with an allocation process, similar to low-income housing tax credits. California had one standard you had to meet -- blight -- and no oversight. Had the cities been willing to accept a statewide cap and strict state oversight, redevelopment might exist today. But the leaders of the League of California Cities decided that no redevelopment at all would be better than that kind of redevelopment. And now we have no redevelopment -- and strict state oversight at the Department of Finance regularly vetoes decisions made by the oversight committees in the remnant redevelopment projects. SB 1156, the best Steinberg bill that Brown vetoed , was a pretty solid piece of legislation -- taking the state general fund out of the game, making tax-increment voluntary and collaborative, and tying it to SB 375. But it still didn't really involve any state oversight. I still think state oversight is going to have to be part of any eventual tax-increment deal, whether cities like it or not. Yesterday's redevelopment panel, which I was part of, contained some good ideas about how we might move forward. Mostly the ideas focused on refocusing redevelopment on projects, rather than districts, which is more typical of tax-increment arrangements in other states. Ken Hira of Kosmont Companies in Los Angeles described several post-redevelopment deals for retail projects, which are totally doable without redevelopment because of you can still do a sales-tax sharing deal. Bill Anderson of AECOM in San Diego, the president-elect of the national APA, suggested some possible changes to the Mello-Roos law to make it easier to form urban community facilities districts. (Currently, CFDs require a two-thirds vote -- of voters if there are more than 12 in the district, or of property owners if there are less.) Anderson's comments reminded me of the tax-increment approach I heard about a couple of weeks ago when I was doing a Smart Growth America technical assistance project in Gwinnett County, Georgia, outside of Atlanta. Georgia allows tax-increment financing districts (known as tax-allocation districts, or TADs) with the consent of school districts, which have to surrender some property tax money. In the case of the declining Gwinnett Place Mall, the school districts went along with project-level TAD because they saw that their property tax revenue would vanish unless something was done. Of course, in California, the schools don't care, because they're backfilled by the state. But maybe there's a way to persuade the beancounters at the Department of Finance that project-level tax increment can sometimes save and increase property tax revenue in a way that benefits the general fund.

Ever since the passage of SB 226 -- the law designed to streamline environment review for infill projects -- the state has been working on changes to the California Environmental Quality Act Guidelines to implement the law. There's a draft of the guidance out (you can find it here ), and CEQA-sters Ron Bass and Terry Rivasplata of ICF International did a good job of laying out what the draft says at a session at the American Planning Association, California Chapter, conference. The bottom line, according to Bass: The guidance is "streamlining by complexity. This is supposed to be streamlining but it's extremely complex." There's no question that Bass is correct. But that's not the fault of the draft guidelines. It's inherent in CEQA itself. CEQA's an incredibly complex law. Carving out exemptions can be simple, but streamlining is inevitably complex. For creating infill exemptions, the definition of infill is, of course, crucial. In the guidance, infill is defined as: -- Being 75% surrounded by existing urban development -- Meeting the new statewide performance standards for infill contained in the new Appendix M -- Being consistent with an adopted Sustainable Communities Strategy or Alternative Planning Strategy. If you qualify, you can do an SCS Environmental Assessment (spelled out in SB 375) or even an Infill EIR, which covers only impacts not previously analyzed, doesn't have to examine alternative locations or densities and doesn't need to look at growth-inducing impacts. "We're creating new stuff here that we have not seen in common practice," says Rivasplata, who acknowledged that he's not sure what an SCS EA or an Infill EIR will look like. The performance standards will apply to various land uses and will include things like, a lower-than-average vehicle miles traveled (VMT) with the Transportation Analysis Zone (TAZ) or within 1/2 mile of a state-specified transit corridor (the same 15-minute headways specified in other laws like SB 375). Bass joked that the streamlined rules will "only apply in Europe". The SB 226 guidance even contains a new checklist (Appendix N), which is not only about impacts but about things like, whether you meet the infill requirement. You can track the rulemaking process by signing up for a listserve here.

Though painful, the unwinding of redevelopment would seem to be a pretty straightforward process for most cities: Designate yourself as the successor agency, negotiate with your oversight committee to keep as much stuff going as possible, and try to keep the state Department of Finance from vetoing the whole situation. But don't overlook the opportunities being created by a forced reorganization of planning and economic development functions. "The chaotic process of unwinding redevelopment has been painful and difficult," said Paul Silvern of HR&A at a panel Tuesday at the annual conference of the American Planning Association, California Chapter , "But it presents interesting opportunities, especially for planners playing a new role – more connected and better connected to the implementation side, particularly in smaller cities." Silvern of HR&A a "continuum" of post-redevelopment strategies, while Kevin Keller of L.A. City Planning – and the current president of APACA – talked about how Los Angeles was moving away from redevelopment to more conventional planning anyway. Silvern laid out the varied strategies of four cities: Alhambra, Oakland, San Diego, and Los Angeles. Although all except Alhambra are large, the examples could be instructive. He emphasized that the end of tax-increment might actually allow cities and counties to view economic development more broadly again. Among other things, he noted that many cities that are now receiving increased general fund property taxes as a result of the end of redevelopment – a 15% bump on average – are considering setting aside all or some of those funds for redevelopment-type purposes. The Alhambra Approach As CP&DR reported last spring , Alhambra was the first and most aggressive small city to move on redevelopment – following the longstanding approach of City Manager Julio Fuentes, who was the last president of the California Redevelopment Association before it folded. Within a few days, Alhambra had granted the city and its economic development division all the specific powers of a redevelopment agency except that of tax-increment, including eminent domain for economic development purposes, writing down land, and so forth. The Oakland Approach Oakland was especially hard hit by redevelopment because the city had, over time, increasingly used tax-increment funds to pay for positions in general fund departments such as police. The city has used the end of redevelopment as a way of reorganizing a huge number of city functions – consolidating planning and building into one department, and economic and workforce development into another. The city has also created an Office of Neighborhood Investment, which staffs the successor agency. The San Diego Approach As CP&DR indicated last spring might happen , San Diego has retained its unusual structure of farming out development/redevelopment activities to nonprofit agencies created by the city. Center City Development Corp. was often viewed as a highly successful example of an innovative approach – a nonprofit development entity that contracted with the city to execute redevelopment plans, process permit approvals, and conduct planning. Southeast Development Corp. followed the same model. CCDC and SEDC have been merged into a new entity called "Civic San Diego," which retains the permitting functions, serves as the successor agency, provides economic development services in the two areas, and operates the downtown parking management district. Though tax-increment is gone, Civic San Diego is funded by a wide variety of revenue sources including the new post-redevelopment administrative fees, permit application fees, and parking revenues. The Los Angeles Approach For decades, the mayor-controlled Community Redevelopment Agency ran the show, while a variety of other agencies did bits and pieces of economic development and the city council largely sat on the sidelines. That's part of the reason the council, in dramatic fashion, rejected the idea of the city serving as a successor agency. While the governor-appointed board of the successor agency winds down redevelopment, the city is looking at consolidating all other functions into some kind of central economic development office or division. Meanwhile, the Department of City Planning had already begun to take over some functions downtown, where redevelopment project areas were scheduled to expire beginning in 2013 anyway. Keller said the city has already adopted new design guidelines for downtown and expanded its transfer of development rights ordinance (known in Los Angeles as TFAR, for Transfer fo Floor Area Ratio). "We were already taking on ‘Bringing Back Broadway'," he said, and noted that the city is looking to other new sources of funding such as business improvement districts and planning funds from Measure R, which are funneled through L.A. Metro.

Last week, I posted a blog from the American Planning Association, California Chapter, conference suggesting that the new guidelines to implement the streamlining of environmental review for infill projects under SB 226 might be making the whole process even more complicated. Relying on comments by Ron Bass and Terry Rivasplata of ICF International, I titled the blog, "Streamlining CEQA is Really Complicated," and I concluded that because CEQA is a complicated law, simplifying it really is a complicated matter. Well, the Governor's Office of Planning and Research disagrees. OPR Senior Counsel Chris Calfee, who worked on the guideline changes, wrote to CP&DR with a 1 1/2-page response, which I'll reproduce in its entirety below. Here are a couple of highlights from Calfee's response: On EIRs: As a practical matter, … infill projects can avoid lengthy EIRs and instead be approved on the basis of a checklist, without going through new public review, preparing responses to comments, or a statement of overriding considerations.  On criteria for the streamlining and related matters: Still think that SB 226 is too complex to be helpful?  Compare SB 226 to other CEQA streamlining for infill.  The Guidelines, for example, avoid the prescriptive criteria found in the statutory exemption for infill.  (Pub. Resources Code § 21159.24.)  They also avoid the inflexibility of the master EIR process.  (Pub. Resources Code § 21157 et seq.)  Under the proposed Guidelines, programmatic review need not specifically identify future infill projects, and it does not need to be less than five years old.  The programmatic review does not even need to be contained in one document, but can instead consist of a program EIR plus supplements and addenda.  Finally, unlike tiering in section 21094, the proposed Guidelines do not require the programmatic document to reduce all impacts to a less than significant level. Here is Calfee's complete response, with hyperlinks: SB 226:  Complex, or Simply New? A little over one year since Gov. Brown signed SB 226 (Simitian, 2011), CEQA Guidelines implementing its new infill streamlining provisions are now close to adoption.  This blog recently observed that SB 226 is too complex.  The Guidelines, though, are not really complicated – they are just new.  Get to know them, and you will find a valuable streamlining tool.  SB 226 streamlines the CEQA process for infill development.  For decades, state policy has favored infill because it conserves natural resources and is an efficient way to grow.  More recently, we have also recognized infill as a key strategy to reduce greenhouse gas emissions.  Since many urban environments are already impacted, however, new infill may contribute to existing cumulative impacts.  As a result, new environmental impact reports may be required, even for relatively small projects.  explanation=">explanation" proposed="proposed" Guidelines.="Guidelines."> SB 226 creates an easier path for infill development by narrowing the scope of impacts that need to be analyzed at the project level.  Impacts of a project that were already addressed at a programmatic level are not subject to CEQA, even if those impacts remain significant.  Impacts that are addressed by local development policies or standards, such as construction noise ordinances and traffic impact fees, are not subject to CEQA either, even if such policies do not fully mitigate the impact.  As a practical matter, this means infill projects can avoid lengthy EIRs and instead be approved on the basis of a checklist, without going through new public review, preparing responses to comments, or a statement of overriding considerations.  Even if an EIR is needed to address a new or more severe impact, that EIR is focused on just the new impact, and does not look at growth inducing impacts or a full range of alternatives.  The proposed new Guidelines Section 15183.3 and proposed Appendix N walk users through this process step-by-step.  To be eligible, a project needs to be within an incorporated city on an infill site (i.e., previously developed or mostly surrounded by other development), and be consistent with an adopted sustainable communities strategy or alternative planning strategy.  It also needs to implement the performance standards in proposed new Appendix M of the Guidelines.  While the statute requires the standards to promote a wide range of state goals, the Guidelines focused on the simplest way to achieve those goals: reducing vehicle travel.  To maximize flexibility in project location and design, the Guidelines created several options to satisfy those standards.  Generally, a project will be eligible if it locates in an area that already has lower than average regional vehicle miles traveled (something that MPOs are currently mapping using data developed during the SB 375 process), or by locating near public transit or project-users.  Since the performance standards are written into the Guidelines, and not embedded in the statute, they can be updated and refined as necessary. Still think that SB 226 is too complex to be helpful?  Compare SB 226 to other CEQA streamlining for infill.  The Guidelines, for example, avoid the prescriptive criteria found in the statutory exemption for infill.  (Pub. Resources Code § 21159.24.)  They also avoid the inflexibility of the master EIR process.  (Pub. Resources Code § 21157 et seq.)  Under the proposed Guidelines, programmatic review need not specifically identify future infill projects, and it does not need to be less than five years old.  The programmatic review does not even need to be contained in one document, but can instead consist of a program EIR plus supplements and addenda.  Finally, unlike tiering in section 21094, the proposed Guidelines do not require the programmatic document to reduce all impacts to a less than significant level. The Office of Planning and Research and the Natural Resources Agency did extensive outreach in developing the Guidelines, and actively sought input from working practitioners at the local and regional levels, as well as builders, environmental organizations and other stakeholders.  They took seriously concerns about complexity and ease of implementation.  According to comments submitted by the Association of Environmental Professionals, the proposed Guidelines "are clear, concise and well-organized."  Planners, agency staff and developers that spend a little time with them may find that they agree.