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Posted by xaviervir on March 5, 2011


Local governments seem to be losing battle to keep redevelopment agencies

By Tracy Seipel – San Jose Mercury News
Posted: 03/04/2011 08:59:23 PM PST
Updated: 03/04/2011 09:03:54 PM PST


After months of lobbying against Gov. Jerry Brown’s controversial move to eliminate redevelopment agencies throughout California, it now seems clear leaders in Santa Cruz County and the Bay Area have lost their fight in Sacramento.

A key state legislative committee is backing the end of redevelopment, and even a group of Bay Area business leaders told the governor in San Francisco on Friday they were supporting his plan. Facing a $26.6 billion budget shortfall, South Bay lawmakers say there is little choice but to divert those redevelopment dollars to schools and local services, as the governor has proposed.

“I think this is going to happen as a matter of necessity,” State Sen. Joe Simitian, D-Palo Alto, told the Mercury News Friday.

Added Sen. Elaine Alquist, D-Santa Clara: “When I have had to cut billions of dollars from safety-net programs for the elderly and the sick, redirecting redevelopment agency funding is among the least of the worst choices I have had to face.”

The tidal wave of momentum behind Brown’s efforts to end one of California cities’ most-cherished economic generators has city leaders across the state looking at their next move: suing the state.

A full vote by the state Assembly and Senate on Brown’s budget plan is expected as early as Thursday, and should they decide to shut down redevelopment agencies, local governments say they will join litigation proposed by either the California League of Cities or California Redevelopment Association that contends such an act would be unconstitutional.

They base their claim on Proposition 22, approved by voters in November 2010, that prohibits the Legislature from redirecting redevelopment agency funds to benefit the state.

“The ink is barely dry on Prop. 22, which says the state does not have the right to take redevelopment funds,” said San Jose Redevelopment Agency Chief Harry Mavrogenes.

But while litigation may prove to be an effective delay tactic, Brown supporters say the cities have a weak case. Prop. 22 may prevent the state from raiding redevelopment coffers, but it doesn’t stop the legislature from abolishing the agencies altogether, they say.

Friday, Brown came to San Francisco to receive the backing of the Bay Area Council, a public policy group representing the area’s largest employers. The group endorsed his budget plan, including asking voters to extend tax increases and eliminating redevelopment agencies.

The day before, the Legislature’s Budget Conference Committee voted to eliminate the agencies in a party-line vote, with six Democrats out-numbering four Republicans. The vote is considered an important indicator of how the entire Legislature will vote.

Brown’s proposal would shift the billions of dollars in taxes now collected by redevelopment agencies to schools and local services. The move is part of a complex plan to plug California’s massive budget shortfall and open up a new source of revenue for future years to fix the state’s chronic funding problems.

But local leaders say using redevelopment dollars to rebuild blighted areas is a vital tool for boosting local economies. While their lobbying efforts will continue until the 11th hour, local cities say they expect to end up in court.

Referring to Prop. 22, Chris McKenzie, executive director of the California League of Cities, said the committee’s vote to eliminate redevelopment agencies says “to more than 5.7 million California voters, ‘Your vote doesn’t count.”’

But Brown spokesman Evan Westrup said the governor is confident his proposal is “legally sound.”

“While bloated redevelopment agencies are fast-tracking billions of dollars, hiring high priced law firms and threatening lawsuits, teachers are facing layoffs and public safety budgets are being slashed in cities across the state,” he said Friday. “Legal obstruction and obfuscation won’t get us any closer to addressing California’s massive budget deficit.”

Brown outlined in his Jan. 10 budget proposal that ending the state’s redevelopment agencies would free up about $1.7 billion for local governments in the next fiscal year. That number would increase after redevelopment agencies pay off their debts. Brown’s plan would protect all existing contractual and financial obligations that those agencies have while creating “successor” agencies that would manage that debt.

State officials last month dismissed a proposal from California’s 10 biggest cities that would allow the agencies to divert about $200 million a years to the state for 25 years as an alternative to killing the agencies.

Santa Clara leaders, who were counting on $40 million of earmarked redevelopment agency funding for their project to build a new 49ers stadium, also are on board with the legal option to sue the state, said acting city manager Carol McCarthy.

Instead of tying up a budget in court, legislators like Simitian say it’s time to move ahead with solutions to follow the successes of decades of redevelopment in California. “The question is then how do you breathe life into a successor agency so the good work that can be done by redevelopment agencies can be done?” Simitian said.

As one alternative, Brown has said he would seek legislation or a ballot measure that would lower the threshold for local communities to tax themselves for economic development with a 55 percent vote.

In Santa Cruz County, local municipalities are moving quickly to obligate as much funding as possible. Gov. Brown’s plan calls for liquidating all assets not tied up in legal agreements.

Santa Cruz Mayor Ryan Coonerty said city leaders would strongly consider joining a potential lawsuit by the League of California Cities or others against the state for taking the money. Calling the proposed abolishment of agencies unconstitutional, Coonerty believes redevelopment is critical to generating more economic interest that will help pull Santa Cruz out of an economic slump.

In the meantime, the Cruz City Council will consider agreements Tuesday for five projects involving $4.6 million in redevelopment funds. They include a $1.1 million agreement with Mercy Housing for a proposed senior project, $2.8 million for undergrounding and streetscape improvements on Riverside Avenue, and $110,000 to acquire a trolley from the Metro transit agency.

The council, which also acts as the Redevelopment Agency directors, also will vote to transfer several redevelopment assets, including the Del Mar Theater, Tannery Arts Center and Lofts Housing on River Street, and several parking lots into city hands to protect them from the state raid. Last week, the council also agreed to sell nearly $33 million in bonds on the private market to fund current and future redevelopment plans, money that city officials believe the state would have to cover through the very tax increment Brown wants to block.

Also hoping to beat a final bill, the Watsonville City Council will consider several redevelopment projects Tuesday, including lending $2 million to a nonprofit housing developer to refurbish the 200-unit Sunny Meadows apartment complex and allocating $750,000 for engineering studies for infrastructure at the planned Manabe-Ow business park near Riverside Drive and Highway 1.

City Manager Carlos Palacios will ask the council to approve the transfer of eight downtown properties owned by the Redevelopment Agency to the city to keep them from ending up in “legal limbo.”

Palacios said the city was counting on redevelopment money to continue sprucing up the downtown with facade and signage improvements, and as part of the funding for a potholed-section of Freedom Boulevard. He worries about how the city will support the development of affordable housing projects in the future without dedicated redevelopment money.

“If the bill is approved, I think there will be a lot of litigation, a lot of uncertainty,” Palacios said. “Nevertheless, we have some very important projects we want to move forward so we’re going to try to protect ourselves.”

The county’s Board of Supervisors recently approved a $600 million agreement with the county’s Redevelopment Agency in an attempt to lock up funding. The board is expected to discuss the future of redevelopment at its Wednesday meeting.

Scotts Valley City Councilman Jim Reed said City Manager Steve Ando has requested a council meeting planned for Wednesday be moved up to Tuesday to get out in front of a possible vote on grabbing redevelopment money in Sacramento. Two-thirds of the city’s $4.2 million in redevelopment funding is set aside for affordable housing projects, but Reed said it isn’t clear whether the council will obligate all those funds.

“Regardless, we’re not just looking to throw money around just on anything,” Reed said. “We’re looking at things that we can justify to taxpayers. We’re not just going to go on a spending spree.”



  1. Shelby said

    There were two jiffy San Pablo cc meetings to transfer RDA funds General Funds and property to a newly created Economic Development Corporation. Both meetings were not held at the usual time. The first meeting lasted about five minutes. The second was longer, but the issue at hand (turning over $22M and over 14 of the people’s properties to this new entity)was dealt with expediently.Councilman McNeil asked two or so vaguely relevant questions and the cc voted in favor of all items.
    (1) Why weren’t these issues dealt with at the regular meetings?

    (2) Why was the second meeting at 4 PM when working people could not attend?

    (3)Does this cc really understand the complexity, the legal ramifications of passing this measure? Are they relinquishing their duty to represent the people’s interests by turning all funds over to this new Corporation?

    (4)What’s in it for the people of San Pablo? I have gone over the many pages and I see nothing.And look at the bid statement (CCTimes>business>legal notices.) See anything for San Pablo workers?

    (5) Does this put all funds (including, it appears, General Funds) out of reach of the people?

    (6)If this winds up in court do we, the taxpayers, have to pay to defend it?

    Re the article:
    (a)”business leaders supporting the plan…” Glad they are paying attention. Current law re RDA and eminent domain gives them no protection.

    (b)”have to cut billions…” The problem started with the Big Banks confiscating billions of the people’s wealth by forcing taxpayers to pay for ‘toxic assets’ and then the legislators allowing the banks to refuse to lend to keep businesses afloat.The resulting fiasco caused a world-wide fiscal crisis. Here, among other things, property values plummeted, which caused city and state revenues to likewise go down. The solution at the state level appears to be continue the increased taxes and cut the most vulnerable.

    (c) The state does not appear to be proposing tax the richest, tax the oil companies for extracting the people’s oil (like they do in other states),deal with the horrendous public pension problem, deal with the education problem, move to create a state bank (like North Dakota)which could eliminate interest on debt which sends millions out of state, legislate marking down houses to actual market value, legislate a moratorium on foreclosures, etc. In other words, the people who created the problem are not only off Scott-free (and enabled to commit further fraud on the people), but also the people who were innocent are forced to pay for the financial sectors misdeeds, incompetence and greed with inflationary price increases, taxes and cuts. We are told to tighten our belt. They loosen theirs to accommodate further bloat.

    So the state solution is tax the already robbed middle and lower class and cut the disabled, poor, elderly and education, rather than deal with systemic problems. This mirrors the Federal level. The ‘too big to fail’ banks are now bigger and little of consequence has been done re meaningful change to regulation. They are free to do what they have done and are no doubt doing it as you read this.

    (d) “most cherished economic generators…” The writer might do some homework. The RDAs transfer tax dollars out of cities to favored developers and cause increase in taxes to existing taxpayers.Studies show there is no economic benefit to cities from RDA activity.(google:Public Policy Institute of California, “Subsidizing Redevelopment in California.” Likewise, the school districts jumped on the band wagon, confiscating school properties to sell to developers. Notice all the people who favor RDAs are those who have been sucking off the well-worn government teat, i.e. taxpayer dollar.

    (e)Ca League of Cities-one of the many organizations dedicated to ‘stack and pack’ people into small spaces under the name of ‘sustainable development’.See San Pablo Specific Plan on city site. Destroy neighborhoods, build four story apartment buildings, compliments of our RDA and city council.
    And google:You Tube:UN Agenda 21 Sustainable Development by Shaw, Att. and CPA of Santa Cruz. This is the master plan.

    (f)”Ca Redevelopment Association” is financed by bond people that suck money out of Ca through debt. Your tax dollars are supporting them to shaft you. Check the budget.
    (g)”rebuild blight areas..” Bad joke. Nothing done for the people here, nor is any thing planned.Check the last agendas.
    (h)Did you understand Prop 22?
    (i)”Brown’s plan would protect…” But who protects the people from local government?
    (j)”pay off their debts…” That’s what SP should be doing now. From Greece to Iceland to Argentina to Ireland to Portugal to Spain to nearly every state to the federal government, the problem is debt.Question: To whom is it owed? Is this airy-fairy digit money that has no actual real wealth backing?
    Any plan here to pay it off? Not likely. Check out Rotary Club site and who schmoozes with whom.
    (k) “continue sprucing up…” This is the mentality of the aspiring bourgeoisie. As long as things look good superficially all is well. In San Pablo, the homeless sites are hidden, the foreclosures are many, the investment in jobs and training is nil, the school scores are at bottom, the neighborhoods didn’t even get the trees they’ve been asking for for generations. But things look lovely from the freeway to city hall, which is the workplace of people who don’t live here and don’t pay taxes here. We pay them excellent salaries and benefits and give them an excellent work place and they work diligently on making things look good, at least what they have to look at.How many have spent how much time in the neighborhoods? What are we getting?

    So, the game goes on,but the pendulum always swings. Many European people are taking to the streets. The Mid-East is erupting. People in more and more states are taking to the streets. UCB students are fighting back. All this from imposed “austerity”, dictated by those that rule, the economic parasites, the go-along-to-get-along, the self-seeking, the ill-informed. In the meantime the fat cats get fatter,and count their assets rather than reading history. Wealth continues to be moved up the class ladder, out of cities to consultants, developers,to pay off big box corporations, etc. One way it’s done is through Redevelopment Agencies. Looks like in San Pablo they hope to continue ripping off the people through this new Economic Development Corporation.
    What will the future bring? We are living in a time of high risk, destined to suffer (or perhaps benefit from) an age of the highly improbable.(See Nassim Taleb’s ‘Black Swan.’) The city manager and city council are betting on doing the same old, same old.i.e., top down communication, subsidize the private sector with tax dollars, party with the vested interests, appease the people with meaningless meetings while confiscating millions of the people’s money for whatever they choose. But I’m betting on the people. We are many. The people in power are few. They derive their power from us. They see us as an annoying side-issue they must put up with so as to extract wealth through taxes, fines, fees. In fact, they are expendable, each and all.

    Note: I read the Black Swan some time ago. As I recall, the story goes:years ago people used the term as in “That will happen when we have black swans..” Sort of like “…when pigs fly..” Then they landed in Australia and found black swans. Point is: one exception to the rule (or economic miscalculation) can blow a hole…in everything. Check interview with Charlie Rose on line. There’s more to it.

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