Lawmakers urged to keep redevelopment agencies in business

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California’s local redevelopment agencies are out of business. That’s the upshot of Thursday's ruling by the state Supreme Court.

But supporters of redevelopment agencies hope to convince lawmakers to pass new legislation that would reinstate the institutions.

They say the legislature never intended to do away with institutions that create jobs through renovation of blighted areas.

As part of this year’s budget, state lawmakers voted to dissolve more than 400 local redevelopment agencies. The move saved the state nearly $2 billion. H.D. Palmer with the Department of Finance says the California Supreme Court’s ruling means they don’t have to go back and patch a hole in the budget plan.

"It is good for the budget at large, but in particular it is good news for K-12 schools." Palmer says.

Redevelopment agencies siphon off a portion of local property tax revenues that would otherwise go to school districts and to local fire and police services. So Palmer explains, "Redirecting redevelopment revenue will provide schools with more than a billion dollars in funding this year and will provide a critical source of ongoing funding in future years."

Redirecting redevelopment revenue also saves the state billions of dollars each year. That’s because Sacramento’s been paying school districts the slice of local property tax that goes to redevelopment agencies.

Many lawmakers didn’t want their districts to lose those redevelopment dollars. They balked at first, but ended up enacting a compromise plan: one bill killed local redevelopment agencies, and second one that brought them back to life. That second bill allowed agencies to opt in to a plan to pony up $1.7 billion for school districts this year, and nearly half a billion a year going forward. The state Supreme Court upheld the bill that killed redevelopment agencies but struck down the one that gave them life again.

Sen. Roderick Wright (D-Inglewood) voted against both bills.

"It’s not a joyous thing to be able to go to my colleagues next week and say, 'I told you so' but in fact I did tell you so." Wright said of the ruling.

On a debate on Senate floor in June, Wright called the bill to “reform” redevelopment "extortion" and warned it would fail because it forced redevelopment agencies to give local money to the state to balance the budget. Voters passed Proposition 22 to prevent just that scenario.

Wright observed that the supreme court justices ruling finding the law illegal supported his assertion.

"In the Nickerson Garden Housing Project, we would call it 'jacking' somebody. But irrespective of what label you place on it, it’s illegal. Whether you 'jack' them, you extort it, or you call it Bill, that’s illegal."

Wright wasn’t the only one who warned the bill had problems. California’s Redevelopment Agency and the League of California Cities lobbied hard to defeat it. When it passed, they sued to stop it. That backfired. The state Supreme Court’s ruling that lawmakers can dissolve redevelopment agencies but can’t “reform” them is the worst possible outcome for redevelopment supporters.

Chris McKenzie, who heads the League of California Cities, says the opposite of what state lawmakers intended. "It’s very clear that most legislators wanted to see redevelopment continue and that this really, at the end of the day, was all about money." McKenzie said.

McKenzie's "hopeful" enough lawmakers will support enacting some kind of fix to today's ruling that will reestablish redevelopment agencies, "otherwise there’s going to be a lot fewer jobs, there’s going to be a lot less affordable housing, and there’s going to be a lot more environmental contamination that’s never cleared up, because the most important tool for doing all of those things will no longer exists."

Wright's willing to try, but he says it may be tough to rally the two-thirds of votes they'll need to override a veto by the governor.

This year Wright authored a bill (SB-286) to prohibit redevelopment agencies from using tax revenues intended for schools, but allow them to continue with economic development projects. The bill languished in committee.