In what has been billed a significant victory for the Jerry Brown administration, the California Supreme Court ruled on Thursday that the state could eliminate redevelopment agencies, thus paving the way for the state to divert money from local redevelopment agencies in an effort to balance the current budget.
“That power,” the court went on, “includes the authority to create entities, such as redevelopment agencies, to carry out the state’s ends and the corollary power to dissolve those same entities when the Legislature deems it necessary and proper. Proposition 22, while it amended the state Constitution to impose new limits on the Legislature’s fiscal powers, neither explicitly nor implicitly rescinded the Legislature’s power to dissolve redevelopment agencies.”
On the other hand, the court ruled that AB 27, “the measure conditioning further redevelopment agency operations on additional payments by an agency’s community sponsors to state funds benefiting schools and special districts” was invalid, as it violated Proposition 22 which “expressly forbids the Legislature from requiring such payments.”
They therefore rejected arguments “that the payments are valid because technically voluntary cannot be reconciled with the fact that the payments are a requirement of continued operation” and ruled AB 27 “invalid in its entirety.”
Much of the reaction focused on the first portion of the ruling that allowed for the elimination of redevelopment.
Governor Jerry Brown in a statement Thursday applauded the ruling stating, “Today’s ruling by the California Supreme Court validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety.”
Assembly Speaker John Pérez (D-Los Angeles) saw the court’s decision as mixed.
In statement he said, “Today’s action by the Supreme Court is a mixed result. The Supreme Court validated the Legislature’s action to eliminate existing redevelopment agencies, but we are disappointed that they blocked the creation of smaller, more targeted redevelopment agencies that fully funded affordable housing.”
He added: “With Republicans refusing to approve badly needed revenue increases, the Legislature’s action on RDAs became one of many necessary components to balance the $26 billion budget shortfall resulting from the Great Recession.”
“Despite the Court’s action blocking our creation of the smaller RDAs that protected affordable housing funding, we remain committed to finding affordable housing solutions and making smart economic development investments in our local communities,” the Speaker concluded.
Advocates for local government, including the League of California Cities, issued a call to reinstate redevelopment agencies.
“In the wake of today’s ruling by the California Supreme Court upholding the elimination of redevelopment agencies, the California Redevelopment Association (CRA) and League of California Cities (League) vowed to work with state legislators immediately to develop legislation to revive redevelopment in order to protect local communities, job creation and our economy,” began a lengthy statement from the League and the CRA.
“Without immediate legislative action to fix this adverse decision, this ruling is a tremendous blow to local job creation and economic advancement,” said California Redevelopment Association board president Julio Fuentes. “The legislative record is abundantly clear that legislators did not intend to abolish redevelopment.”
Some Democratic legislators like Senator Alex Padilla expressed support for such a measure: “Redevelopment creates jobs and economic activity vital to our state’s economic recovery. It was clearly not my desire, nor the intention of most of my colleagues, to abolish redevelopment when we voted on the state budget last year. I would like to see redevelopment restored so it can continue to be a vital tool to improve local communities and local economies. I look forward to working with my colleagues next year to make that happen.”
Assemblymember Luis Alejo added, “I’ve seen firsthand the benefits of redevelopment in my district. 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. We need it in California.”
Chris McKenzie, Executive Director of the League of California Cities, said in a statement, “Redevelopment is indispensable to cities to spur economic development, create jobs and improve communities. We know legislators recognize that and we hope they’re willing to work with us to reinstate redevelopment. We want to work as partners with state lawmakers to revive this tool in an accountable manner.”
Assemblymember Mariko Yamada, who represents part of Yolo County and the eastern portion of Solano County, issued her own statement on Thursday, stating, “With today’s court ruling on RDA, we’ve turned the page on redevelopment as we once knew it. The State’s difficult choices under a continuing no-new-revenue environment forced us to prioritize and work to prevent further cuts to education, healthcare and public safety.”
She added, “Let us resume our discussions in the New Year and find ways to support communities that struggle with blight and the need for affordable housing.”
Brief Vanguard Analysis
The Vanguard will have much more on the impact of this decision in the coming days and weeks. However, many are declaring redevelopment dead.
Indeed, the high court in this state gave the state the power to end redevelopment while at the same time striking down the compromise version of it.
The impact of this will have far-reaching consequences. Last spring, the Davis City Council, in an effort to secure existing funds, pumped a huge amount of money into some questionable projects that need further vetting – the parking garage on 3rd and 4th and E and F, and the Hotel Conference Center which will require the relocation of the highly successful Caffe Italia.
There will be questions about the future of the pass-through agreement, which has prevented the county for the last 25 years or so from developing in Davis’ sphere of influence.
And then there is the ultimate question about whether the death of redevelopment will really free up funding for schools.
Early this year, Governor Brown was quoted in the Sacramento Bee saying, “We take from redevelopment and we put $1 billion into schools – that’s a good thing.”
Our schools are hurting and the impact of the cuts to education is really only now being understood. Higher education is feeling it as well, as students have taken to protest, and campus unrest is at levels not seen since the days of the Vietnam War.
And then there are those who will argue that redevelopment does not reduce blight, but instead lines the pocket of wealthy developers.
But the final point that needs to made is that it is entirely possible that this ruling will, in fact, not end redevelopment. After all, the compromise measure is what was approved by state legislators and they may have to go back to the drawing board to find a new compromise. We shall see.
For now, it appears that 2011 is ending the way it began, with questions about the future of redevelopment and what to do about it.
—David M. Greenwald reporting