Supreme Court Agrees to Hear Redevelopment Case, Issues Stay of Payments

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.

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. 

OK, nothing surrounding redevelopment is much "fun" these days. But let's try to lighten the mood. 

After an agonizing six-month prelude, the curtain has finally risen on the drama that is redevelopment in California. Agencies are now forced contemplate the costs of staving off their own demise.

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.  

The wait continues.  

Reports indicated that the leadership in both houses would push for a vote on the elimination of redevelopment in today's 9 a.m. floor sessions. The vote on the mirror bills SB 77 and AB 101 has been anticipated for two weeks as Gov. Jerry Brown has attempted to shore up support for his budget package, including some $12 billion in taxes.

Those sessions have come and gone. 

As the clock ticks down to an imminent -- but as yet unscheduled -- vote on Gov. Jerry Brown's budget proposal, localities and their respective redevelopment agencies have been taking frantic evasive measures to try to shield funds and properties from liquidation and transfer to the state. 

If Gov. Jerry Brown gets his way in the Legislature in the coming days, he and the state will face a conundrum to make a Zen master's head spin: Is it illegal to transfer funds from agencies that no longer exist?

The governor has thus far been unyielding in his effort to eliminate the state's redevelopment agencies. In doing so he hopes to recoup up to $1.7 billion to help offset the state's estimated $26 billion deficit. Negotiations are ongoing at the Capitol, with a handful of Republican legislators--the so-called "GOP 5"�still in discussions with the Democratic governor. A vote is expected any day now. 

The debate over the fate of redevelopment has called into question the usefulness of redevelopment in places such as, say, Coronado or Palm Desert. But there is no doubt that blight still infects large swaths of the state's major cities -- and that those cities are deeply concerned about the fate of their redevelopment agencies. 

In response to the release of a draft bill that would make the elimination of redevelopment official, the mayors of the state's nine largest cities today sent a stern letter [.pdf] to Gov. Jerry Brown asking him once again to reconsider his intention to eliminate their redevelopment agencies -- along with nearly 400 others across the state. 

Throughout the now eight-week battle over the fate of redevelopment, both sides have issued claims about the efficacy -- or lack thereof -- of redevelopment but have relied on scant data to do so. Today the empirical analysis of redevelopment has, according to the office of State Controller John Chiang, become quite a bit clearer. 

Five weeks ago Chiang initiated a limited-scope review of redevelopment and today released findings that are highly critical of redevelopment. Among other criticisms, the findings directly contradict claims that redevelopment is responsible for the creation of hundreds of thousands of jobs -- because, according to the report, agencies have done little, or nothing, to track job creation. 

With apologies to Sir Isaac Newton, we may finally find out what happens when an irresistible force runs headlong into an immovable object. 

If California's redevelopment agencies vanish on July 1, as Gov. Jerry Brown has proposed, it's clear the task of mending the state's blighted neighborhoods will likely grow more complicated. Less obvious is the fact that California's effort to clean up the Earth's atmosphere may grow more difficult as well.