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Blighted Areas Now A Calif. Budget Battleground

LIANE HANSEN, Host:

NPR's Jim Zarroli reports.

JIM ZARROLI: When Nora Davis moved to the San Francisco bay area city of Emeryville 30 years ago, it was a place the economy left behind.

ZARROLI: The steel plants moved out, the truckers, the paint companies moved out, left behind this toxic wasteland of empty buildings. They were in very serious economic condition because their tax base had essentially abandoned them.

ZARROLI: Today, Davis is Emeryville's mayor and the city is transformed. The abandoned factories have been replaced by big box stores, offices and hotels. The animation company Pixar moved its headquarters into a renovated cannery. There's a retail and housing complex called Bay Street Emeryville.

ZARROLI: It's a thriving, exciting shopping center that people like to come to.

ZARROLI: City official Helen Bean says the commercial developers who built these projects never would have come to Emeryville without California's redevelopment program, which provided money to clean up old industrial sites and build access roads.

ZARROLI: Well, the cost would have been too great. The time and the cost and the risk all would have been more than what a developer could take on.

ZARROLI: Redevelopment officials say there are more than 400 redevelopment agencies in California and few, if any, ever shut down. Terry Christensen teaches political science at San Jose State University.

P: Do they ever end? Well, that's a really good question and I am sure there are places where that's happened, but in most places they seem to find a way to go on almost indefinitely.

ZARROLI: City officials in California love redevelopment. Here was Governor Brown addressing an audience in January.

G: When I was mayor of Oakland, I built a lot of good things. I liked redevelopment. Didn't quite understand it; seemed kind of magical. It was the money that you could spend on stuff that they wouldn't otherwise let you spend.

ZARROLI: But today, Brown is fighting to eliminate the program. Spokesman Evan Westrup says redevelopment agencies siphon tax revenue away from local communities - money that would be better spent on schools and police, which means more of a burden on the state.

ZARROLI: At this point, you have billions of dollars going to what have become bloated redevelopment agencies. And given the times we're in right now, the governor believes we need to rethink how those scarce taxpayer dollars are being spent.

ZARROLI: Chris McKenzie of the California League of Cities argues that redevelopment has been an economic boon for the state.

ZARROLI: We believe the governor's proposal in all respects is dead on arrival, but more importantly sacrificing over $2 billion in tax revenues that's generated by redevelopment agency investments is very unwise for this state.

ZARROLI: McKenzie argues that Brown lacks the constitutional authority to eliminate redevelopment. Local officials have mounted a huge campaign to save the program, but Terry Christensen of San Jose State isn't sure how much public support it has.

ZARROLI: There's support amongst the elected officials and redevelopment agency operatives but there's not a lot of public support for it, partly because the public doesn't always understand how it works.

ZARROLI: Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.

Jim Zarroli is an NPR correspondent based in New York. He covers economics and business news.