“Building better communities” was the slogan of the California Redevelopment Association. But the critics charged that redevelopment agencies “deprived tens of thousands of working and lower-income residents of their homes and livelihoods while granting vast subsidies to billionaires.” In the end, the social justice questions didn’t matter, but the subsidies did, so to save the state billions of dollars a year, California redevelopment agencies shut down for good last week.
The agencies had $30 billion worth of outstanding debts to private parties which will still be repaid out of tax-increment finance (TIF) revenues. But these repayments will only use about half of the $5.7 billion in TIF revenues the agencies collected each year, so now the other half will be returned to schools and other entities that rely on property taxes. Since the state has to make up the difference when schools lost money to TIF, the state ends up saving billions of dollars a year. As the debts are paid off, the state will save even more money.
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Some cities complain that they are still on the hook for some $4 billion owed to them by the redevelopment agencies. Tough luck, said the California legislature: despite the legal fiction that each city and redevelopment agency were two different entities (necessary so the redevelopment agency could default on its bonds if a project failed without jeopardizing the city’s credit rating), they really were one and the same: in many cases, the redevelopment “board” was identical to the city council. If the projects the cities funded were really so important, they should find other money to pay for them; if they weren’t, then why did they spend other people’s money (which is what TIF really is) on them?
California invented TIF in 1952. Since then, 48 other states have passed similar laws. Now a pioneer in ending such crony capitalism, the Antiplanner hopes the other 48 states will soon follow California’s example. Good riddance to a waste of money that benefitted few people other than a few politicians and developers.
Like many aspects of government TIF is not bad on its face, it has just been misused terribly.
I agree with you, bennett. As the Antiplanner has repeatedly pointed out, TIF is a way to spend huge amounts of money off-budget and it gets little attention because it is argued to be “self-funded”. That a recipe for corruption and misuse, even if it does have some logic to the concept.
There are a few contexts in which TIF may be a good idea. Subsidizing mixed-use developments in “blighted” areas is not one of them. “Redevelopment” associations have done a poor job separating themselves from the mistakes of urban renewal.
bennett said:
Like many aspects of government TIF is not bad on its face, it has just been misused terribly.
THWM: Since when has context been important to O’Toole?
When I go shopping, I pay for other peoples parking, cross subsidizing is every where!