THE ISSUE: Gov. Jerry Brown signed a law ending California's existing redevelopment program in June. The state Supreme Court upheld the law, shutting down agencies on Feb. 1. Sponsoring cities (and some counties) will hold the assets and pay off outstanding debt. The state will save $1.7 billion in 2011-12 from the end of redevelopment.

What should be the future of redevelopment in California?

Pia Lopez: Give the locals some tools

California gets a "do-over" in how it revitalizes communities.

It should be a time for innovation – not for woe-is-me hand-wringing or misbegotten attempts to resurrect the old system.

For 60 years, the state allowed local governments (mostly cities, but some counties) to set up redevelopment agencies that could take a cut of the tax pie, without going to voters and without raising taxes, to finance economic development projects.

This seemingly "free money" did come at a cost, however, taking 12 percent of the state's property taxes each year – money that would otherwise go to schools and other public services, and had to be replaced by the state.

With the elimination of redevelopment as we've known it, we ought not just say: "Oh, well, let's welcome rundown neighborhoods and urban decay." The task of building and upgrading does not go away – roads, water systems and other public works so areas are ready for private development; housing for lower-income working families; community centers, parks, libraries, and other public facilities.

To me, the question all along has been who should bear responsibility for local economic development – not whether we should have such efforts at all, as some critics would have it.

Now that the state has ended the current redevelopment system, the governor and lawmakers should give localities the tools to invest in economic development efforts that pass muster locally. Currently, they have few options for raising funds for economic development.

Gov. Brown promised he would offer up a replacement plan for local economic development. He needs to follow through on that.

Specifically, he suggested a constitutional amendment lowering the voter approval threshold from two-thirds to 55 percent for general and limited-obligation bonds for economic development purposes.

This would give local governments greater flexibility in raising money to finance capital projects. And, as a Public Policy Institute of California report concluded in May, it would provide "stronger incentives to support only the most effective projects and programs."

The old system, because it was largely invisible, had major abuses along with successes – such as subsidizing big-box chain retail, shopping malls and auto dealerships. And in the Big Kahuna of abuses, Palm Desert allocated $16.7 million to the luxury Desert Willow Golf Resort to renovate golf greens and build a hotel – far afield from what redevelopment should be about.

Gov. Brown has done the state a major service in upending the 60-year-old system. It had run its course. Now is the time to think anew – as Californians did in 1952.

Pia Lopez is an editorial writer at The Bee.

Ben Boychuk: Don’t trust the locals yet

California's redevelopment agencies were corrupt and had to go. But it's hardly obvious that re-empowering local officials with "new and improved" economic development authority is a wise idea.

Don't misunderstand. It wasn't that city officials who served on state redevelopment agency boards received bribes and kickbacks, or engaged in what most people would acknowledge to be lawbreaking. The corruption was of a more insidious kind – the kind that encourages unhealthy alliances between government and business at the expense of the greater public good.

It's also worth acknowledging that Gov. Brown and the Democrats in the Legislature last year did the right thing for the wrong reason, voting to end the decades-old redevelopment regime because the state wanted to tap more than $1.7 billion in additional tax revenues.

Generally speaking, local government is preferable to state or federal government because locals are more accountable to the people they represent. But as Steven Greenhut has reported at length for City Journal and elsewhere, the late, unlamented agencies were best understood as "secret governments" that piled on billions in debt, abused eminent domain, and handed out subsidies to favored developers without much scrutiny or accountability.

A constitutional amendment making it easier to float even more debt to finance projects of dubious public worth is the last thing this fiscal basket case of a state needs right now.

What we need instead is more rigorous, less elastic definitions of "public use" and "public benefit."

Great evils have been done in the name of economic development, and not just in Palm Desert. The U.S. Supreme Court's 2005 decision in Kelo v. New London put a constitutional seal of approval on government's use of eminent domain to take private property for private development. An older, working-class neighborhood in New London, Conn., was destroyed to make way for a conference center that was never built, all because city leaders figured they could raise more taxes.

"Public benefit," properly understood, should mean projects that benefit the whole public: police stations, hospitals, schools, and libraries. Not auto malls or upscale hotels.

And insofar as government has a role in promoting economic development, it's in building and maintaining an infrastructure that makes a city attractive for private enterprise. Instead of subsidizing a big-box store owner's parking lot, try filling some potholes on surrounding city streets.

In short, local governments need to get their priorities straight before they get a new pile of money to spend.

Ben Boychuk is associate editor of the Manhattan Institute's City Journal. (www.city-journal.org/california)

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