An audit released Monday criticizes California redevelopment agencies for lacking performance measures that track how well they are fighting blight and creating jobs.
The review by the state controller's office also showed great differences in how cities define blight. Palm Desert, for example, used redevelopment money to renovate greens and bunkers at a 4 1/2-star golf resort. Near San Diego, Coronado's redevelopment area covers every privately owned parcel in the city, including multimillion dollar beachfront homes.
As part of his plan to close California's budget deficit, Gov. Jerry Brown wants to eliminate the state's more than 400 redevelopment agencies to send more local tax money to schools, police, fire and other local services. Local governments are defending the agencies and say Brown's plan is illegal.
The 18 agencies subject to the audit represent 16 percent of all redevelopment dollars statewide in fiscal year 2009-10. Controller John Chiang said the findings are troubling because the lack of accountability and transparency "is a breeding ground for waste, abuse, and impropriety."
"For a government activity which consumers more than $5.5 billion of public resources annually, we should be troubled that there are no objective performance measures demonstrating that taxpayers are receiving optimal return for each dollar invested," Chiang said in a statement.
State auditors found that only 10 of the 18 redevelopment agencies attempted to track the number of jobs created. Four of the 10 agencies could provide no methodology or explanation for their figures.
In a response, the city of San Jose defended its methodology for tracking the number of jobs created. Executive director Harry Mavrogenes wrote to the controller that the agency had documents to support its jobs calculation and that it used a valid methodology.
The controller's audit also found that redevelopment dollars often went to pay for city and county employees' salaries without proof that it was for redevelopment services. For example, in the eastern San Francisco Bay area city of Pittsburg, the redevelopment agency transferred $3 million to the city's general fund, but no documents exist to show the money went to redevelopment services.
Five of the agencies audited failed to make $33.6 million in required payments to school district, which increases the state's obligations to local school districts. And many agencies made inappropriate charges to their affordable housing funds, including $833,000 by the city of Los Angeles for administration costs.
The state controller's office announced in January that it would examine how well tax dollars were being used by redevelopment agencies, which have emerged at the center of a debate over California's budget. The 18 agencies, including those in Los Angeles, Sacramento and Riverside, were selected to reflect urban, suburban and rural communities.
While Brown has proposed a phase-out of redevelopment agencies as one way to help close California's $26.6 billion deficit, city and local government officials defend redevelopment agencies as one of their main tools to kick-start construction projects and create jobs.
On Monday, a coalition of local government leaders, business, labor and community groups announced a grass-roots campaign to try to stop the state Legislature from voting on Brown's proposal. They argue that the move would violate Proposition 22, which voters passed in November to prohibit the state from raiding local redevelopment funds.
"You can't just tell 5.7 million voters 'your vote doesn't count,'" said Chris McKenzie, executive director of the League of California Cities. "This type of illegal end run around the voters' will breeds greater voter cynicism and discontent." A message left for McKenzie wasn't immediately returned Monday.
Meanwhile, the California Professional Firefighters and the California School Employees Association announced it began airing radio ads supporting Brown's proposal. The ad says it's time to end taxpayer subsidies for developers, including a bar in downtown Sacramento that features live mermaids, and instead protect local schools and public safety services.