Good News for Californians: Redevelopment Agencies Shut Down
By Randall Holcombe • Monday January 2, 2012 2:25 PM PDT • 4 Comments
In the face of substantial budgetary problems, California’s legislature voted to shut down its more than 400 redevelopment agencies that used tax dollars to partner with developers to redevelop blighted areas. Governor Jerry Brown proposed shutting down those agencies, saying the $5 billion they spent annually could be better spent elsewhere.
One reason this is worth a comment is that it is rare to see an existing government program shut down.
Even though some beneficial projects were undertaken by redevelopment agencies over the years, there is no evidence that the money spent on those projects was used more productively than if development had been left to the private sector. Meanwhile, there is also ample evidence that in many cases the money was not productively used.
The incentives are ripe for abuse in this type of government program. Bureaucrats who run the redevelopment programs have no incentive to keep costs down, because the costs are being paid by taxpayers, so the agencies often overpay for property. This may be due to the limited competence of government employees who are dealing with more experienced developers, or it may be a way to channel benefits to friends and associates. And, bribery and fraud has been a part of some projects. The development agencies had lots of money, and very little oversight, so it is likely that the bribery, fraud, and mismanagement that did become visible were just the tip of the iceberg.
Needless to say, those who had control of this money were quick to criticize the decision to shut the development agencies down. Lots of benefits come with the ability to spend other people’s money. But this is a clear win for California’s citizens and taxpayers. As Ben Powell and I document in Housing America, Californians, and all Americans, already suffer from too much government planning in land use decisions.
Tags: Budget and Tax Policy, California, Corruption, Economics, Free Market, Government subsidies, Housing, Land use, Politics, Taxation, The State 
It’s good news indeed, Randy.
Also, for years, shortfalls in funding supposedly needed for public schools have been blamed on Prop 13 (limiting property tax increases), when in point of fact the money was going to these redevelopment agency bondoggles.
The fact that a “liberal” killed the agencies shows the nonsensical nature of those who stand on party lines. 7 years of the Republican Schwarzenegger got California nothing but deeper in debt and more burdened by regulations. Brown has lots of faults, but this was a great win.
best wishes,
Mary
Mary L. G. Theroux | Jan 2, 2012 | Reply
Randall Holcombe,Tuesday, January 03,2012
“But this is a clear win for California’s citizens and taxpayers.” “...the $ 5 billion they spent annually could be better spent..” Let’s see if could be,will be better spent – for the people.
Thanking you for this opportunity to comment -
James M. de Laurier
James de Laurier | Jan 3, 2012 | Reply
What a wasteful idea anyway. Here’s a prime example I’m watching potentially unfold right before my eyes:
Cathedral City has its “redevelopment” literally in its own backyard! It’s called the gay community across the border in Palm Springs...a city that is now looking forward to throwing off the now less profitable gay identity (too many gays are “married” and no longer patronize bars and even restaurants like they used to – these days they prefer to stay home and “play house”) and so now, the Indians as well as the influential people up mountain would just as soon make it a place more “comfortable” to the average straight couple, the “family” if not for college kids as well. Sonny Bono is gone, he had a great idea and did a splendid job but times have changed.
That gay business (and the gentrification that came with it) originally came to Palm Springs FROM formerly more “permissive” Cathedral City and was lured to Palm Springs as an idea Sonny had to invigorate that city.
Today Cathedral City is a half deserted shadow with too many ACORN houses and no imminent future – with or without state redevelopment money. But it wont need that money when profitable gay oriented businesses get nudged out of Palm Springs, and flock there (if they are to welcome them back) and the typically more monied gay population follows. Its a natural “free market” manner in which a city can redevelop itself, familiar with its own “resources” instead of handing off the job to some bureaucrat way off somewhere else.
JoeBejma | Jan 17, 2012 | Reply