East Bay cities are vowing to fight a plan signed by Gov. Jerry Brown last week to use money earmarked for local revitalization to plug the state deficit.
Brown endorsed two bills: One dissolves the state's nearly 400 redevelopment agencies and the other allows individual agencies to remain if they "pay to play," handing over their share of the $1.7 billion in givebacks and making smaller payments in perpetuity.
City administrators around the East Bay are calling the move "coercive" and "disastrous" and many have pledged to support the California Redevelopment Association and the League of California Cities in bringing a suit to the state Supreme Court.
Advocates argue the law violates Proposition 22, an initiative approved overwhelmingly last November that bars the state from raiding funds used for redevelopment and other local services.
"Under Prop. 22, what the governor and the legislature have done is clearly illegal," said Steve Duran, community economic development director for Richmond, where property tax receipts for redevelopment were $18 million last year. "He is basically throwing the cities under the bus."
Cities have been fighting for months to preserve the 66-year-old urban revitalization program, which helps communities eliminate blight and create affordable housing by reinvesting property tax revenues that would otherwise be shared with counties and schools.
Flagship redevelopment projects around the East Bay include new offices at the reopened Ford Assembly Plant on Richmond's waterfront, the historic restoration of the Fox Theater in Oakland and Pittsburg's Vidrio housing and retail complex. Future big-dollar developments would be shelved if the agencies end, officials say; there aren't enough general fund revenues these days to finance large-scale projects.
Opposition to the bill is particularly fierce in Oakland, where the agency plays a part in roughly half of all City Council business, according to Mayor Jean Quan.
"They're trying to use very small legal loophole to get away with this by saying the cities are voluntarily giving back the funds to keep their redevelopment agencies," she said. "But if you have a gun to your head, it's not voluntary."
If the law withstands legal challenges, Contra Costa cities will face steep payments, according to the redevelopment association. Those include Oakland at $40 million; Emeryville at $13.2 million; Richmond at $10.4 million; Fremont at $9 million; Pittsburg at $6.6 million and Concord at $6.2 million. Cities with smaller agencies such as Walnut Creek, Pleasant Hill and Livermore would have to make payments of more than $1 million.
Some cities are confident that they can buy into the new plan, unpleasant as it may be. Fremont's agency, for example, recently paid off all of its debt and negotiated an increase in revenue, according to redevelopment director Elisa Tierney.
"It's a lot easier for cities like us that have a little bit of cash on hand," Tierney said. "For some agencies that already have debt, it's the death knell."
The state already took back a portion of redevelopment funds last year to ease the school budget crisis. Cities such as Pittsburg and Hercules that failed to make the required payments would remain millions of dollars in debt even if they could find the required "pay to play" funds.
At least five East Bay cities have told the Redevelopment Association that they cannot make the payments.
In Antioch, councilwoman Mary Rocha called Brown's actions, "devastating," and said she felt like the city's state representatives had committed a betrayal.
The take-away could mean more tax dollars for other public agencies such as schools and fire departments. Cities argue that in the long term, redevelopment agencies make back the funds they use by boosting property tax revenues and creating jobs.
"The economy's in the toilet and this is the last economic tool cities have to do job creation and construction in their communities," said Matt Rodriguez, city manager for San Pablo, which plans to support the legal challenge to the bill. "I think this is just a money grab and it's going to cause a lot of problems for a lot of folks"
Contact Hannah Dreier at 510-262-2787. Follow her at Twitter.com/hannahdreier. Staff writers Paul Burgarino, Rick Radin, Sean Maher and Tom Lochner contributed to this story.
By the numbers
If a "pay to play" bill endorsed by Gov. Jerry Brown withstands legal challenges, East Bay cities will face steep payments, according to the redevelopment association. Some of those include:
$40 million: Oakland
$13.2 million: Emeryville
$10.4 million: Richmond
$9 million: Fremont
$6.6 million: Pittsburg
$6.2 million: Concord