Proposal to Eliminate Redevelopement Agencies Creates Uncertainties for Some California Projects

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Governor Brown’s initial budget proposal includes the elimination of redevelopment agencies so that current uncommitted agency funds and future property tax increment revenues may be diverted from redevelopment to other uses.

If adopted by the California Legislature, the Governor’s budget proposal would affect developers and property owners who own or are considering owning property in a current redevelopment project area. Of course, because redevelopment agencies provide cities with a way to divert property tax revenue from state and county governments, resistance to the Governor’s proposal may be expected from existing redevelopment agencies and municipalities. However, because the Governor’s proposal may succeed – and even if it does not succeed it will add uncertainty – below is a brief review of the Governor’s proposal and its implications together with ideas to consider in determining and mitigating risk.

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