The End Is Near! And What Follows Redevelopment Isn't Clear

No Worries
No Worries Photo by Larry West/Flickr, used under a Creative Commons License

With just 14 days to go, city officials have no clear idea of what will happen following the February 1 deadline that pulls the plug on California's 400 redevelopment agencies. (On December 29, the state Supreme Court unanimously rejected arguments made by the California Redevelopment Association and the League of California Cities challenging the constitutionality of AB 26, the legislation that brings redevelopment agencies to an end.)

The legislature may find a temporary stay of execution in SB 659, introduced by a worried Senator Alex Padilla. He's asking legislators and the governor to postpone the February deadline so that cities can "develop a new job creation and renewal program, and to develop a solution that ensures that schools and the State budget receive the funding intended by the Legislature."

But Senate President Pro Tem Darrell Steinberg is unlikely to support Padilla's delay, and many in the state Senate share their reluctance. Steinberg favors a new mechanism that would allow some publicly-funded development, but strictly limited to projects that meet state-defined goals: jobs, affordable housing, and transit-oriented development.

[Update: Governor Brown won't back legislation to delay the end of redeveliopment, it was reported on 12/19.]

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Steinberg's vague proposal conceals what the legislative leadership has privately told city council members for the past 30 years: "Your city's money is our money."

A handful of cities (with many more watching and waiting) have turned to the courts for injunctive relief from redevelopment doom on the grounds that AB 26 is flawed for reasons other than those raised by the Redevelopment Association and the League of Cities (and rejected by the state Supreme Court).

The cities contend that AB 26 unconstitutionally invalidates the loans cities made to their redevelopment agency to purchase land and fund projects. Cities that lent money, in some cases tens of millions of dollars, will not be paid back, putting taxpayers on the hook.

(In Signal Hill, for example, the city is owed about $8 million, while Long Beach is owed more than $119 million.)

All cities are considering their limited options as the clock runs down. Some have chosen to trigger a provision in AB 26 that will give the city "successor agency" status. Other cities -- most notably Los Angeles -- have abandoned their redevelopment agency.

But neither strategy will prevent the shuttering of hundreds of agency-funded projects and a "fire sale" of assets.

Under AB 26, agency dissolution will be supervised by a seven-member board, consisting of members appointed by the county, the mayor, the county Superintendent of Education, the Chancellor of California Community Colleges and the Los Angeles County Sanitation District. (Since the city of Los Angeles declined to be a successor agency, its oversight board won't have members directly appointed by the mayor.)

The oversight board will sell whatever is of value in the agency's portfolio, primarily the land acquired for future projects. The board is supposed to sell assets off at "the highest value, regardless of best land use" with the proceeds divvied up by the Los Angeles County Auditor-Controller among the taxing agencies that have a share of local property taxes.

Neither the state nor counties and school districts have anything to lose in the dissolution process. School districts and counties will get more property taxes in the future. The state will reduce the payments it makes to schools and counties, lowering the state's debt burden.

But cities will lay off employees whose wages were paid through redevelopment. They will abandon half-completed development projects. And cities will lose a significant tool for economic growth.

Unless the legislature can craft a new redevelopment model, and Governor Brown chooses to engage in the process. But don't expect cities to be happy with "new redevelopment," should that option even be possible.

In the future, the state legislature and the governor -- not city councils -- will determine how communities grow and change, project by project, neighborhood by neighborhood.

"Old redevelopment" is nearly done. And the end -- of home rule -- is near.

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