American federalism was purposely crafted to make change difficult. As much as we complain about the inefficiency of government sometimes with good reason we often forget that its slow speed has given us a strong and stable democracy. Decisions that affect the public, or the spending of public dollars, should be methodical.
Until recently, government spending of public dollars to finance local economic development in California was easy. Too easy. Redevelopment agencies had the power to make large investment decisions without voter approval by spending future tax revenue that would otherwise go toward counties, cities, school districts and special districts. While some redevelopment agencies invested wisely and transformed their communities, others undoubtedly misused and misspent their funds.
The dissolution of redevelopment agencies rebalanced California's democracy, and changed the game for cities wanting to finance economic development activities. Many city officials and staff do not know how they will continue to finance economic development without the agencies. The truth is that many economic development activities are still capable of being financed through existing mechanisms. Cities can still fund the building of roads, parks, sidewalks, city hall buildings, sports arenas and affordable housing developments.
The truth is that other financing options remain available; they are simply harder to use than redevelopment agencies. None of these other mechanisms provide the flexibility that existed with redevelopment agency tax-increment financing. Existing mechanisms all require voter approval, which thanks to Proposition 13 means there is a battle to secure approval from two-thirds of voters. It is highly unlikely that the Legislature will be able to tackle the bipartisan effort needed to change voter approval requirements. Even if they did lower voter-approval to a 55 percent threshold, an election is still much more work for a city than the "no-vote-required" system that redevelopment agencies provided.
In the new era, cities will have to do a much better job planning economic development. They will have to design local economic development strategies with involvement from city leaders, business leaders and citizens. Collaboration and increased public-private partnerships will be necessary to implement new strategies. City leaders will also have to understand and accept that economic development may occur more slowly than before. In developing local strategies, city leaders must understand the landscape in which they operate.
Cities will need to be more business friendly, because they cannot afford to offer cash incentives. Creating a culture of service within a municipal organization is hard. However, cities that can create that culture and build positive relationships with potential and existing businesses will likely achieve greater success. To create a culture of service, a city must have a clear vision shared by municipal staff and citizens.
Having a community vision is different from having an economic development plan. Simon Sinek, author of the book "Start With Why," suggests that people do not buy what you do, but they buy why you do it. Few cities have a clearly defined vision that is visible not only through the organization, but throughout the city as well. Cities' websites offer plentiful information about their economic development departments, but rarely explain why a city is different from its neighboring communities. A properly defined vision is now not only necessary, but must be externally visible in every action a city takes.
For too long, cities had it too easy when it came to financing economic development. Because it was easy, there was little incentive to study the effectiveness of different strategies. Researchers and membership organizations now must focus on researching what economic strategies do work, and how to disseminate those best practices to California's cities.
Yes, economic development is harder now than before, but that has certain advantages. It will require cities to plan better, communicate more with the citizens they represent, work harder to achieve their goals, and be more careful about how they spend taxpayer dollars. If cities create a clear vision, plan, improve service and collaborate, they will undoubtedly strengthen their local economies.