Supreme Court Upholds Decision To Eliminate Redevelopment Agencies

The California Supreme Court upheld its decision to eliminate redevelopment agencies Thursday.

The decision elicited vows from the California Redevelopment Association and the League of California Cities to work with state legislators to revive the agencies they said protect job creation and local economies.

“I don’t disagree with the decision of the Supreme Court, I disagree with the state legislature bringing it before the court,” said San Carlos Mayor Andy Klein. “In the long term, if we are not able to boost jobs, all agencies will suffer. We need to continue to grow or jobs and our economy.” 

Major San Carlos projects that have been in he works for some time, such as the Wheeler Plaza development, will not continue, said Klein. “We’re going to have to liquidate those assets, sell buildings for a loss and flood the market. Or, the buildings won’t sell and having empty buildings will cause rents to drop and property values to fall.”

Klein pointed to some of the San Carlos redevelopments agencies triumphs over recent years: repairs to infrastructure, the East Side Connect program, and affordable housing, the latter, he said, presenting the biggest challenge to maintain with the elimination of redevelopment.

“This is going to be a big problem for us,” Klein said. 

The court upheld the decision to eliminate the redevelopment agencies and struck down the bill that would have allowed the agencies to operate by paying dues to the state. The bill was passed as part of the state’s 2011-2012 budget.

"Without immediate legislative action to fix this adverse decision, this ruling is a tremendous blow to local job creation and economic advancement,” said CRA Board President Julio Fuentes. “The legislative record is abundantly clear that Legislators did not intend to abolish redevelopment. We hope to work with state lawmakers to come up with a way to restore redevelopment. "

In July 2011, California Redevelopment Agency v. Matosantos was filed by the CRA and the League of California Cities in response to the bill urging to eliminate redevelopment from communities.

In 2010, Governor Brown originally proposed the elimination of redevelopment agencies, a bill placed on the ballot that was voted down. The State Legislature reintroduced the bill with a proposed second option asking cities to pay the state in order to remain operational.

Property taxes funded the redevelopment agencies, money the state legislature wanted to see redistributed to them in the amount of $1.7 billion to keep the agencies operational.

The amount owed per city would differ based on the size of the agency, state officials said.

The California Supreme Court found the state governments request to redirect those property taxes illegal, and shot down their request.

In eliminating the redevelopments agencies, however, the state government will still receive about $1 billion in diverted property taxes, money that would have otherwise gone toward redevelopment.

The additional money will now be re-appropriated towards schools.

"I've seen firsthand the benefit of redevelopment in my district,” said Assemblyman Luis Alejo. “When I voted for the budget last June, I did so with the intent that redevelopment agencies in my district and throughout the state would continue to operate, continue to produce jobs and boost local economies 

“Today's ruling essentially kills redevelopment and I plan to start off 2012 by collaborating with my colleagues to restore redevelopment, “ Alejo continued. “We need it in California."

The next legislative session begins in four days, and supporters of redevelopment agencies hope to have this decision reversed.

"CRA is ready and willing to engage in immediate dialogue with Legislators and the Governor on a meaningful 'fix' to this problem,” said Interim Executive Director Jim Kennedy. “We have ideas for ways to restore redevelopment while also providing the state budgetary relief in a manner that doesn't violate Prop 22.

“Time is of the essence, and the future of California's economy is at stake,” Kennedy said. ”We hope legislators will join us in this important effort, for the sake of our future."