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What Comes Next?

Creating new, good-paying jobs in California is a goal shared by cities and state government. In fact, with the economy stuck in the slowest recovery in memory, everyone seems to be interested in job creation. We have presidential candidates talking about protecting the “job creators” (a term new to many of us), the governor courting Chinese businesses and government officials to invest in California, and the Legislature beginning to wonder how it can help.

In the wake of redevelopment agencies’ elimination by the state Legislature and governor, however, city officials and legislators are asking, “What comes next?” What can be done to replace the roughly 300,000 private-sector jobs and $2 billion in state and local tax revenues that economists told us redevelopment helped create each year? In a state without a discernable economic development strategy, quite frankly it’s hard to know what state government policy-makers believe is good for economic development in California.

As state leaders ponder this essential question, city leaders know they don’t have the luxury of waiting. They are refocusing, identifying strategic opportunities and proposing ways to help the private sector make future investments through public-private partnerships that translate into good-paying jobs. Business leaders are quick to identify some of California’s competitive disadvantages when compared to some of our neighboring states: high energy costs, high land costs, high labor costs, stricter environmental laws and high workers’ compensation costs.

Before the loss of redevelopment funding, cities could help offset many of these business investment disincentives by providing direct and indirect financial assistance through redevelopment. In effect, they could essentially buy down the cost of doing business in California through grants, loans and discounted real-estate transactions that made the private investment pencil out.

It’s Time for a New Model

With that incredibly valuable economic development tool now gone, city and state officials have the opportunity to work together to develop a new generation of economic development tools that will — we hope — help cities continue some of the best work that redevelopment agencies achieved. In short, it’s time to rebuild a state economic development partnership that will help support what social scientists consistently tell us is the most important element in fighting crime, raising the standard of living, and keeping families together: a good-paying job.

A task this complex and important will take both short- and longer-term strategies to succeed in California. One of the most important short-term strategies cities can employ is described in an excellent article in this issue by the city manager and city attorney of Alhambra (see “Creating Economic Development at the Local Level”). The city’s “self-help” approach is an extremely worthwhile initiative that doesn’t require waiting for state action. Every city can and should inventory its available resources and authority and determine what makes sense for it in the months and years ahead regardless of any possible state action.

New Task Force Addresses Economic Development

Recently the League created a special Task Force on the Next Generation of Economic Development Tools, chaired by League First Vice President and Pasadena Mayor Bill Bogaard. The task force is developing recommendations that, if adopted, will guide the League’s work with the governor and Legislature in fashioning a new state-local economic development partnership. The task force believes this partnership should focus on two goals:

  1. Providing ongoing funding for local infrastructure and economic development projects; and
  2. Addressing concerns related to:
  • Cleaning up brownfields now held by successor agencies;
  • Preserving critical community assets that will be needed for future community revitalization, transit-oriented development, etc.; and
  • Allowing unspent bond proceeds to be used to finish quality projects.

The task force has recommended the following League strategies, which will have been reviewed by the League’s policy committees and board of directors as this issue of Western City goes to press. The strategies comprise the following short- and longer-term components.

Short-Term Action: In the Next Few Months

  1. Cleanup of AB X1 26. Cities and redevelopment successor agencies are facing serious challenges dealing with many unresolved issues from AB X1 26.  Pursuing and supporting legislation that would address these challenges is the most important thing that can be done in the short term.  AB 1585 (Perez) is a great first step, but other legislation addressing asset management, brownfields, unspent bond proceeds and other matters should be pursued however possible.  (For more on AB 1585, visit www.cacities.org/billsearch.)
  2. Infrastructure Financing Districts (IFDs). Draft and support amendments that make SB 214 (Wolk) and IFDs workable tools for cities to finance infrastructure through tax-increment financing in both existing and newly developing areas.  (For more on SB 214, visit www.cacities.org/billsearch.)
  3. Other Opportunities. Support other legislation that can expand local economic development and infrastructure options as opportunities arise.
  4. Continued Research. Continue to research, examine and develop new possibilities and flexibility for tax-increment financing, assessment districts, economic development corporations and other ways to expand cities’ ability to develop infrastructure, provide services, pursue economic development, remove blight, assemble land and develop affordable housing.

Longer-Term Action: Before The Year Ends

  1. Legislation to Allow State Investment in Local Projects. Draft concept legislation that would authorize the state, via the State Infrastructure Bank or another entity, to approve the use of some or all of the local school share of property tax to support tax-increment financing for projects that advance important state priorities; for example, projects consistent with SB 375, affordable housing, military base reuse and projects to attract high-wage employers to the state.
  2. Additional Legislation From Research. Work with legislators to develop and refine legislation derived from further League research or ideas offered by other stakeholders.
  3. State Economic Development Strategy. Work with legislators and the governor to encourage the development and adoption of a state economic development strategy, with appropriate state and local fiscal incentives for job creation, urban revitalization and sustainable development.

Stay Informed

The governor’s revised budget will be released shortly, and many expect it will reveal the extent to which he will be willing to go in implementing some of these recommendations. The next few weeks and months will be interesting, to say the least. To check on the latest developments, visit www.cacities.org

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