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Subsidizing Redevelopment in California

Michael Dardia | February 1998

Summary

In California, redevelopment agencies (RDAs) receive about 8 percent of the property taxes collected in the state annually—a percentage that amounted to 1.5 billion in 1993-1994. In a state where local governments are severely constrained by tax limits, this allotment of tax revenues to RDAs has become a matter of intense policy debate. The rationale for the RDAs receiving the property tax revenues is that the agencies’ improvements in the redevelopment area lead to increases in property tax assessments. However, other forces could be contributing to a general rise in local real estate values. The volume explores the purposes of RDAs, their incentives, and how they operate. To illuminate the policy debate, it focuses primarily on the tax revenue issues, estimating for the first time how much of the tax revenue RDAs receive is actually the result of their effect on property values.
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