The Oakland Redevelopment Agency (October 10, 1956–February 1, 2012) was the primary agency responsible for creating and enacting urban redevelopment plans in Oakland. It was dissolved when a law spearheaded by Governor Jerry Brown dissolved all redevelopment agencies statewide.
How it worked
The agency had the power to designate areas of the city as in need of redevelopment, which would then allow it to claim eminent domain and make plans to redevelop property within the designated area (check out the map of Oakland redevelopment areas). Redevelopment occurred through public-private partnerships. Funding was matched by the state and federal government, and the agency itself received revenue generated from increased tax receipts in the redeveloped area (in other words, if a “blighted” area only generated a small amount of tax revenue before a redevelopment project, if its tax receipts increased after the redevelopment project, the ORA was able to collect the difference).
Beginnings of Redevelopment in California
California redevelopment agencies were created as part of the Community Redevelopment Law of 1946. The agencies were created to fight blight, and come under the control of municipal governments (city councils, city managers, etc.). Redevelopment agencies had the power to use eminent domain, create bonds, and borrow from state and federal sources. They received federal funding that had to be matched by local municipalities, a challenge for many municipalities. “After the failure of several attempts at providing the local match through general obligation bonds, bond lawyers at O’Melveny and Meyers came up with the idea of capturing the increased property taxes generated by redevelopment activity as a revenue stream to repay bonds, the proceeds of which would be used to pay the local matching share. This idea was submitted to the voters as an initiative constitutional amendment (now Article XVI, Section 16) and approved in 1952, inaugurating what has come to be called “tax increment financing.”” [Hawkins, 2012]
Mechanism of Development
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The major way that the ORA funded projects was through tax increment financing.
Additionally, the ORA can issue bonds. For example, in Jan. 1967, the city issued a bond (debt - in essence, it secured a loan) for $6,750,000 to finance the Acorn project. This bond was bought by the First National Bank of Boston at a 2.89% interest rate (think of this as a loan the city took out to finance construction at a rate of 2.89%. This means that the city will have to pay back the loan and 2.89% interest yearly. So, for this project, the city agreed to pay an extra $195,075 per year in interest alone6. This is a nice transfer of wealth from the citizens of Oakland to banks.
Dissolution and Future
In 2012, Governor Jerry Brown dissolved all redevelopment agencies across the state after a bitter fight with agencies across the city, as represented by the redevelopment agency lobbying group, California Redevelopment Association. The money that was previously slated for redevelopment agencies will now go to fund public schools across the state [source]. The California Redevelopment Association sued to prevent the Dissolution Act from going into effect in California Redevelopment Association v. Matosantos, but the California Supreme Court voted in favor of the state to maintain the Dissolution Act. The Court’s decision was based on the reasoning that the Legislature has the power to establish or dissolve local agencies as it likes.
In Oakland, properties previously owned by the Redevelopment Agency (such as the Kaiser Convention Center) reverted to city ownership. The Agency’s work moved to the Redevelopment Successor Agency, housed within the Office of Neighborhood Investment. The City estimated that it would lose $28mn in funding for 2011-2013 through the dissolution of the Agency. It’s unclear whether proposed “infrastructure financing districts” will fill part of the role of the disbanded Agencies [source].
- Oak Center
- Paramount Theatre
- Fox Oakland Theatre
- Oakland Army Base
- Oakland City Center
- Laney College (originally known as the “Peralta College Project”)
Pages related to Redevelopment
- “ California cities seek restoration of some redevelopment spending,” LA Times, 1/1/2012
- “Jerry Brown’s Hypocrisy,” East Bay Express, 1/4/2012
- “The Rise and Fall of Redevelopment in California” by T. Brent Hawkins. 2012. First published in the California Real Property Journal, a quarterly publication of the Real Property Section of the State Bar of California (via the California Redevelopment Assocation, the lobbying group of California redevelopment agencies).
- Archives of the Oakland Redevelopment Agency Newsletter, 2008-2011. ===>>> This is an excellent resource for learning about the recent history of the ORA. The first issue provides an excellent background of how the ORA works and its major projects by district.
- Official site of the Oakland Redevelopment Successor Agency and official City page announcing the closure of the Community and Economic Development Agency (this page details how work from the ORA will be split among different departments of the city, but not without a lot of details).
- Hayes, Edward C. Power Structure and Urban Policy: Who Rules in Oakland? McGraw-Hill, Inc.: 1972. p. 121.