Five months ago, Reason TV put together a good look at the aftermath of decades-long urban renewal policies in New York City, as an example of what happened in every major American city in the post-World War II era. Advocates of government-controlled redevelopment hailed it as a way to save blighted cities from the depredations of private property owners, but in practice it became a mechanism to fund and control political machines, reward cronies, and destroy communities — all on the backs of taxpayers.
Nearly seventy years after it began, one state has decided to dump redevelopment altogether — although not for any high-minded ideas of government reform. California simply can’t afford it any longer:
The most encouraging news was the success of Governor Jerry Brown’s plan to shutter the state’s 400-plus redevelopment agencies, which were 1940s-era urban-renewal relics that had come to drain about 12 percent of the state’s property taxes from more traditional public services to pay subsidies to developers who build local projects favored by city hall planners.
This under-reported news is arguably more significant than the storyline about whether or notCalifornia (BEESCA) will raise taxes to solve its fiscal problems.
The agencies — long criticized for their distortion of local land-use decisions, large debt loads and frequent abuse of eminent domain for non-public uses — were dead as of Feb. 1, the result of a political dynamic that few could have predicted even a few months ago. Successor agencies will dispense with their debt, but redevelopment officials can take on no new projects. This is good news.
Good news indeed. Cities eager to get hold of the funds from redevelopment made liberal use (in every sense of the term) of eminent domain to seize private property in order to justify spending tax dollars. It’s precisely that mechanism that drove the seizure at the heart of the Kelo case. In many instances, eminent domain simply transferred private property from one owner to a more politically connected private owner, a point made in the Reason TV piece as well.
One might think that a racket this lucrative to those in power would never get the axe. However, California finds itself in fiscal extremities, thanks in no small part to policies like urban renewal. These agencies got $5 billion per year from the state budget that has been running nearly $30 billion in the red. Short of reforming the public-employee pensions — a step California will still have to take — this was one of the last places Brown and the legislature could cut to any effect of easing their dire fiscal status.
California now joins Arizona as the only other state with no redevelopment agencies to hijack private property from its owners for political payoffs. No matter what the reasons, perhaps the Golden State can provide an example of political reform for the other 48 states still providing politicians with the means to run cronyist machines on the backs of taxpayers.