May 1, 2003 - From the May, 2003 issue

CRA's John Shirey Addresses Vulnerability Of Redevelopment In Latest Budget Cycle

The impact of the state's budget crisis likely will extend to all arms of the government. However, redevelopment agencies statewide are bracing for a significant and debilitating cut to their funding for the next fiscal year. TPR is pleased to present this interview with John Shirey, Executive Director of the California Redevelopment Association, in which he discusses the budget and the future of redevelopment in California.

The California Redevelopment Association includes among its primary functions representing redevelopment agencies on legislative issues. The current state budget crisis has prompted the governor to look at redevelopment funds as one area to cut significantly to meet the challenges of the budget deficit. How vulnerable are redevelopment funds to being taken to meet the budget deficit?

I think we present a very vulnerable target. It's fairly large sums of money that we deal with and, in the context of a serious deficit, we're seen as an easy target. If we weren't seen as an easy target, the Department of Finance wouldn't have recommended us for such a large cut. The point that I always make when people ask me about this issue is that the governor's proposal goes beyond trying to find money to close the budget gap. By proposing that redevelopment be cut this year, next year, and every year thereafter forever, he's really moved to a policy decision with respect to redevelopment. That policy apparently is to greatly cripple and curtail redevelopment activity in California.

Could you make the case for why redevelopment around California ought to be spared from these cuts by the governor's proposed budget?

Actually, we are not taking the position that we have to be spared. Rather, we are taking the position that this deficit is very serious, that everybody is going to have to help in some way and that we're willing to be part of that solution. Our board has decided that we don't want to be part of the "not me club" -those people who support cuts to all programs except their own. We're accepting the fact that we will probably need to take a cut. We are, however, taking the position that that cut should be for only one year and that it should be done in a way such that our agencies can mitigate the impact of that cut.

Could you elaborate on the board's attitude and approach to how this budget balancing might play itself out? What will be the political arguments made to the Governor's finance director and to the Legislature?

At this point, we're dealing with the Legislature and the argument that we're making to the Legislature is that redevelopment is an important contributor to the economy of California. The governor says that he's trying to do some things to bolster the economy of California. But, cutting back a large program which adds to the housing stock, constructs infrastructure, and creates a significant number of jobs every year is not the way to go about bolstering the economy. Fortunately for us, those points seem to be finding more receptive ears in the Legislature.

John, since the passage of Prop. 13, redevelopment funds have been one of the few locally generated, discretionary resources available to local government for planning and economic development. But, over the course of the last decade, redevelopment funds have been appropriated by local governments desperate for resources. Is there much left in the way of discretionary and local redevelopment resources to fight about?

Many of our members will say to us that redevelopment is about the only remaining tool they have to bring about local economic development. The fact is that the passage of Proposition 13 in effect spurred the creation of more project areas-some cities that hadn't previously participated in redevelopment decided to activate their agencies. Redevelopment funding does grow from year to year. It is true that many of those resources are spoken for, in terms of passthroughs to schools and counties, set-asides for housing and debt service on bonds. But, it remains a very significant tool for development. And so, if anything, it's grown in importance, rather than diminished, since Proposition 13.

Redevelopment agencies have, over time, assumed a significant role in promoting affordable housing. Bond measures have passed with redevelopment agencies as the point for implementation. Are those housing dollars at risk in this budgetary crisis?

The housing dollars were at risk with respect to the first proposal made by the governor, which was to cut housing money by $500 million. Due to our efforts and good efforts by our members, the Legislature understands that those dollars are important for projects that are in the pipeline and they have not embraced that proposal. The Legislature seems to want to protect housing money under any scenario for cutting redevelopment, and we think that will likely hold up. I want to just add that one of the things that's been heartening to me as the relatively new executive director in this organization-over the years, there is much more support and enthusiasm for doing housing by our agencies than there was when that requirement was first enacted. It seems to me that local governments have moved housing much higher on their priority list to the point that many of our agencies now think that it's the most important thing that they do. That, of course, goes along with what we all know to be a tremendous shortage of affordable housing in California.

But what about CRA's traditional economic development mission to relieve blight? Have agencies lost track of that agenda because the needs for housing are so great?

The needs for housing are great, but it still represents in the neighborhood of 20 to 30 percent of total funding, leaving the other 70 to 80 percent for economic development activities. I still think that most of our agencies are focused on economic development as their broader goal. So no, I don't feel that it's been slighted. I feel that, if anything, our agencies are just carrying a longer agenda now and they're doing both.

John, TPR carried an interview with landuse law professor George Lefcoe a few months ago in which he chided the LA Redevelopment Agency for taking revenues from schools and the county without engaging in a negotiation with them over relative need and over what was blight. He, in fairnes, also noted that there was very little planning going on anywhere in large urban areas in California post Prop. 13, but what planning did take place was done by redevelopment agencies rather than city planning departments. Do you have any comments on either one of his perspectives?

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I saw that interview and, frankly, didn't know quite what to make of it. Obviously, I think the best situation is when redevelopment agencies and school districts work together, particularly in a situation like Los Angeles where the school district needs much more property to build additional schools because of their expanding school population. I would hope our agencies are finding ways to work together and that differences are not played out in the public or in the press.

By way of orientation, elaborate for our readers on your background and how you were enticed to take the executive directorship of the Association at a time of a great stress for redevelopment agencies throughout California.

I have for the last eight years been the city manager of Cincinnati, Ohio, which is a city in dire need of redevelopment. Much of what I did there was aimed at redeveloping that city. We didn't have the good laws in Ohio that we have in California to do that, and so the job was much more difficult than it is here. Previous to that, I was in the city of Long Beach and was involved with that city's redevelopment efforts. Redevelopment and economic development generally have been great interests of mine over the years. Then, along came this opportunity to focus on that area and to not have to worry about everything that can go wrong in a city.

John, as a former CRA director of Long Beach, a city manager in Cincinnati and now the director state redevelopment association, do cities in California, in your opinion, have the tools they need presently to grapple with projected population growth and concomitant demands on city services?

No they don't. They don't have the resources to do what's going to be expected of them either today or in the future. Cities, and for that matter counties, are both saddled with a very inadequate set of revenues to support important services. It strikes me that we're asking cities and counties to provide important services such as public safety, public works, parks and recreation services – things that the general public expects to be delivered well and at high levels of service – and yet they're given inferior revenues to do that. You cannot expect quality services to be delivered relying on service fees and miscellaneous taxes. We need to restructure state and local finance in California. And as part of that, cities and counties have got to be given dependable sources of revenue to provide mainline services and to address infrastructure issues and now housing needs.

The state and localities throughout California, as you noted earlier, must build a sizable number of new school facilities. Most will be sited, obviously, in our densest urban neighborhoods which also lack housing, open space, libraries and health care. In our post-Prop. 13 world, who should manage the holistic planning and implementation necessary to knit together the investment of school dollars with housing dollars, with health care dollars, with open space dollars?

I still think that planning is going to have to occur at the local level. Some grand notion of statewide or regional planning is still unrealistic. It depends upon the cooperation of local officials and those local governments-cities, counties and school districts and also special districts-to find ways to work together.

And who pays for that collaborative planning?

They're all going to have to pay for it and it's going to have to be a joint planning effort. They have to carve dollars out of their budgets to jointly plan those projects. Just like when it came time to redo the Riverfront in Cincinnati, I had to go to Hamilton County and put together an agreement where we split those costs fifty-fifty. It was done formally and it was done in writing-we both had to find the dollars in order to pay for that planning effort. That's the sort of thing that has to go on everywhere. We also tried to do things jointly with schools and we didn't have additional money-we used existing staffs. It's just that those staffs worked together as opposed to working at odds.

Last question. What would constitute a success at the end of this calendar year for the redevelopment association, and for you personally?

A huge success for us would be that we could get through the next cycle of the state's budget and have a reasonable cut that's limited to only one year. And, we hope it's done in a way that enables our agencies to plan for that cut and to still carry on substantial activities at the end of the day.

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