Battle over redevelopment taken to court





The future of the 425 redevelopment agencies throughout the state is now in the hands of the court.

The California Redevelopment Association and the League of California Cities have filed a lawsuit against the state, asking the Supreme Court to declare Sacramento’s move to wipe out the redevelopment agencies (RDAs) unconstitutional.

“The governor and Legislature have blatantly ignored the voters and violated the state constitution. We must now go to the Supreme Court to uphold the voters’ will and the Constitution by overturning this unconstitutional legislation,” said Chris McKenzie, executive director of the League of California Cities. “We are confident the courts will uphold the will of the voters.”

Gov. Jerry Brown proposed in January to abolish the agencies and help bridge the $25.4-billion budget deficit by steering an estimated $1.7 billion in this year’s property taxes back to the state.

When they declare an area blighted and later sell the land for redevelopment, the agencies are allowed to keep the extra property tax that accrues over time and use it for affordable housing and other renovation projects. Locally, these monies flow through the Simi Valley Community Development Agency, which is separate from the general fund.

Two bills dealing with the elimination of redevelopment agencies—Assembly Bill X1 26 and ABX1 27— were part of the budget deal passed June 28.

While ABX1 26 dissolves all 425 agencies in the state, the second bill, ABX1 27, exempts those that agree to pay a certain amount of money to school districts.

Nathan Hamburger, assistant manager for the city of Agoura Hills, said the governor’s action requires cities to decide whether RDAs under the new rules are still financially viable.

Under the new scenario, cities must either dissolve their RDAs or pay money to the state. The amount Agoura Hills would have to pay to Sacramento is still unclear, Hamburger said.

The Agoura Hills RDA will be reviewed in August.

In total, agencies across the state would have to pay $1.7 billion— the amount of property tax they would otherwise keep—in order to survive next year, and $400 million to survive the following year.

“Really, it’s an extortion payment to the state,” Hamburger said.

Simi Valley, for example, would have to pay $7.2 million in the first year and then $1.7 million annually to keep its redevelopment agency, according to estimates by the California Redevelopment Association (CRA).

The CRA and the league are basing their legal claim on Proposition 22, which bars state lawmakers from raiding or diverting local revenues, including the annual increments of property taxes allocated to redevelopment agencies.

The ballot measure was passed with 61 percent of the vote last November.

Since the two budget bills passed last month, there has been an outcry from cities across the state that don’t want to see their redevelopment agencies shuttered.

John Shirey, executive director of CRA, said many agencies have expressed concern to the association. While some simply cannot afford the “ransom payment” required by ABX1 27 and will cease to exist, others are planning to make the payment but say it will greatly diminish their ability to pursue vital local projects.

“This legislation is a job-killer and an opportunity killer for many local communities in need,” Shirey said. “Fortunately, voters passed Prop. 22 to put a stop to these types of destructive raids by the Legislature. We must now go to the courts to protect our local communities and economies.”

In addition to seeking to overturn the two bills, the lawsuit requests that the Supreme Court issue a stay to prevent the legislation from going into effect until the court decides the case.

The suit was filed directly in the state’s highest court because a quick resolution is needed. Under the terms of ABX1 27, cities with redevelopment agencies intending to make payment must notify the state by Oct. 1. The petition asks the court to make an initial ruling on the request for a stay by Aug. 15.

The cities of San Jose and Union City also joined the petition, saying in declarations provided to the court that they will not be able to make the required payments to keep their RDAs intact.

Br entwood, Oakl and, Modesto, West Sacramento and Guadalupe also filed declarations in support of the lawsuit.



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