Redevelopment Agencies Circle the Wagons, Fight for Funding

Among the roughly 400 redevelopment agencies that will shut down tomorrow, the vast majority have effectively elected to dig their own graves. That was one of the stipulations of AB X1 26, that cities may serve as their own successor agencies, which will oversee the wind-down of operations, liquidation of assets, and payment of outstanding obligations. 

After yesterday's California Supreme Court oral argument in California Redevelopment Association vs. Matosantos – the lawsuit challenging the state's new pay-ransom-or-die redevelopment system – it's still hard to tell where the court will go. But the biggest question that emerged was: What happens it the court upholds AB 1x 26, which abolishes redevelopment, but strikes down AB 1x 27, which permits redevelopment agencies to continue to exist if they pay a "remittance" to the state?

Here we go again. 

In 2009 the redevelopment agencies of California, represented by the California Redevelopment Association, filed suit to block the state's requisitioning of over $1 billion of tax increment financing. That suit failed. 

Update: Late this morning, Gov. Jerry Brown vetoed the budget package that the Legislature sent him yesterday. Brown said that the budget was imbalanced and that the legislation "contains legally questionable maneuvers, costly borrowing and unrealistic savings." Brown reportedly wants to hold out and force a popular vote on tax extensions that he considers critical to overcoming the state's remaining multi-billion dollar deficit. He did not mention redevelopment in his veto statement.  

As with so many trends, the use of tax-increment financing for redevelopment began in California. Since being created here in 1952, this vital aspect of redevelopment has spread to 48 other states. And yet if Gov. Jerry Brown's current budget proposal passes, it may very well die in the state where it was born.

It is not going quietly.

In the two weeks since Brown announced his intention to eliminate redevelopment in California as part of his proposal to cut the state's $24 billion deficit, what used to be a relatively obscure system intended to eradicate blight has been thrust into tumultuous debate.

The primary takeaways from last week's California Redevelopment Association conference was unambiguous: stakeholders and public officials alike must know the true impact of reduction of redevelopment funding in communities and statewide.  Panels on the final day of the conference sent attendees home with some idea of the steps that both local agencies and the state association must take to achieve this goal and keep the state's redevelopment agenda on track.

The Fitch Ratings service on May 1 announced it was ready to take a sunnier view of tax allocation bonds (TABs) administered by successor agencies in California's redevelopment dissolution. The changed view could affect both the sale prices of existing bonds and the interest rates available to successor agencies when they refinance their existing debt with refunding bonds.

Raw fish will not singlehandedly save urban California. But it can still help.

Like the plot of the Bill Murray movie, Groundhog Day, Sacramento politicians are back to the same story on redevelopment this year. It's a re-run of last year, with proponents of redevelopment re-introducing many of the same bills as last year. 

Attempts to resurrect redevelopment were a flop in 2012 when Governor Jerry Brown vetoed most redevelopment-related bills. This year, there is hope for a different ending, where Brown and his Democratic allies can find themselves in agreement on future steps to aid economic development at the local level. 

The Coalition for Responsible Arena Development filed a notice of intent to bring a lawsuit against the proposed downtown arena in Sacramento. The group opposing the proposed development claims that the project violates CEQA and is a misuse of public funds.

As cities around the state are still stinging from the state's decision to deny many of their 240 redevelopment appeals, redevelopment skirmishes still continue around the state -- often about affordable housing projects that cities claim are nearing completion. Here's a sampling:

Santa Ana sues DOF over affordable housing project

KABC

The holiday season continues to be a cruel time of year for California's redevelopment community. Last year, the state Supreme Court struck a blow on Dec. 29, allowing the state to abolish redevelopment agencies.  And this year, on Dec. 18, the state Department of Finance denied funding to many of the 240 of the 400 successor agencies who had appealed earlier rejections. >>read more