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Thursday, December 29, 2011

Redevelopment Agency Dissolved

Breaking News:
Emeryville Redevelopment 
Agency Kaput

Reprinted from Reuters:

California court says state can kill redevelopment agencies

SAN FRANCISCO (Reuters) - In a major victory for California Governor Jerry Brown, the state supreme court on Thursday upheld a law that would eliminate 400 local redevelopment agencies and could divert billions of dollars to schools and other local services.
The court ruled that the state legislature was within its rights to abolish the agencies, which have long played a major role in local development projects ranging from apartment houses to train stations and sports stadiums. At the same time, the court struck down companion legislation that would have enabled the redevelopment agencies to stay in business if they agreed to pay a big chunk of their revenues to the state.
Local officials vehemently opposed the elimination of the redevelopment agencies, and a group of plaintiffs, including theCalifornia Redevelopment Association and the League of California Cities, asked the California Supreme Court to declare both laws unconstitutional.
Redevelopment agencies, widely used around the country, sell bonds to fund local development projects. They pay them off with the increased property tax revenue, or tax increment, that results from the project.
Governor Brown has argued that because of the convoluted way in which property tax revenues are divvied up in California, redevelopment agencies have the effect of diverting money away from schools and other local services. The state is then forced to fill the funding gaps for basic services while the local redevelopment agencies pursue projects that might be beneficial locally, but do little to lift the state's economy as a whole.
The most immediate effect of Thursday's court ruling will be to preserve the state budget for the current fiscal year. The budget, passed last summer, includes $1.7 billion in redevelopment funds that would flow to the state as the agencies are wound down. Successor agencies would assume responsibility for repayment of existing redevelopment bonds; projects that are already underway would in most cases go forward.
The non-partisan legislative analyst's office has estimated that the elimination of redevelopment agencies could free up $2 billion a year for schools, courts and other services.
Jean Ross, executive director of the California Budget Project, called the ruling "good news for the budget."
Local officials, on the other hand, say they will lose a crucial tool for revitalizing blighted areas and promoting local economic development. Redevelopment agencies often acquire land in run-down parts of a city and invest in infrastructure improvements. They then work with private developers to build parks, convention centers, transit stations, shopping malls and apartment buildings, among other things. The agencies also help to fund affordable housing projects around the state.
The elimination of redevelopment agencies is among Gov. Brown's boldest strokes since he took office last year, and a key part of what he calls the "realignment" of state and local taxes and services.
Because the "tax increment" generated by redevelopment projects is not subject to the state-mandated formula on how local tax revenues are divided among cities, counties, schools and special districts, local officials have an incentive to rely heavily on redevelopment districts for a wide range of projects. The city of Oakland, for example, was found earlier this year to be financing some police services, and even part of the mayor's salary, with redevelopment funds.
Redevelopment critics also say the agencies have gone far beyond their mission of combating blight and often subsidize projects that either would have been built anyway, or would have been built in a nearby city.
(Reporting by Jonathan Weber and Dan Levine; Editing by Dan Grebler)


  1. so what is the total amount of debt the "redevelopment agency" carries?

  2. This story promises to change Emeryville's course fundamentally. There will do doubt be short term disruptions including what to do with the mountain of debt left behind by the Redevelopment Agency. The Tattler will keep on top of this breaking story.

  3. First, Brian, let me say that you do an excellent job in digging out the stories that are most important for us, Emeryville's residents, in a timely manner.

    There were several quotable comments in the article you re-printed:

    "redevelopment agencies have the effect of diverting money away from schools and other local services"

    That is quite correct. The original mandate for redevelopment agencies was to take truly blighted land or neighborhoods, where banks would not even make loans and new businesses would no longer locate, areas of high unemployment, and invest public funds (the future tax revenues, accessed in real-time via tax financed bonds) to make things better until an area had recovered and could stand on its own.

    What ended up happening, is that the redevelopment agencies started taking (by eminent domain or the threat of eminent domain) even perfectly UN-blighted properties so the redevelopment agency could "suck away" (from schools and parks and police etc. - essential state and local needs) the increased tax revenues that resulted from the real estate development. For what? Why of course for even bigger and better projects and city halls, the endless pursuit of bureaucratic glory.

    "Local officials, on the other hand, say they will lose a crucial tool for revitalizing blighted areas and promoting local economic development."

    Not true. True once upon a time. Perhaps true for some sites in Emeryville full of toxic wastes, when lenders wouldn't touch such sites.

    Not true, as John Fricke was first to point out loudly and often in Emeryville, for Emeryville for years. As Mr. Fricke pointed out, Emeryville has been "overbidding" for new development for years, not recognizing the economic magnet of its prime near-Bay Bridge location.

    And finally, " The city of Oakland, for example, was found earlier this year to be financing some police services, and even part of the mayor's salary, with redevelopment funds."

    Fortunately here in Emeryville we would never say we are doing one thing yet do another with publicly sanctioned funds. For example, Measure J for the Emeryville Center of Community Life specifically promised (or trickily implied, depending on your tolerance for fine-print and/or creative legal interpretations) that all bond monies would go into actual bricks and mortar, commonly know as construction, and not to pay current salaries or operating expenses. Yet here we are paying portions of school staff salaries out of Measure J funds and buying iPads for students (under the guise of building up technological resources for students). (I don't object to building infrastructure, but worry that Measure J funds should go to items that have a useful life comparable to that of a building.)

    Anyway truth is I am glad that redevelopment is finished in California. The Agencies were robbing the schools by subsidizing big businesses in their development games. Now that money will go back to the public schools where it belongs and maybe one day we will no longer have a classist, racist society where only rich people can get their kids a good education. That's not the California I grew up in, and I want better for my kids.

    Hooray Jerry Brown! What guts to so completely upend the status quo.

  4. It's clear from the comments that both Messrs. Webber and Donahue don't fully understand how redevelopment works. Redevelopment has never taken money away from schools. The Governor would like you to believe that is true. It is clear that there is voter support for redevelopment, and the only way the Governor could garner support for eliminating redevelopment was to pit redevelopment agencies against school districts. It was an unfortunate political reality. I believe that the legislature knows the value of redevelopment and will devise a program to replace it. In fact, the legislature recently created a sort of Infrastructure Finance District very similar to the redevelopment model to allow the City and County of San Francisco to finance it's hosting of the America's Cup. I think this legislation will serve as a model for the future of redevelopment.

  5. To Mr Anonymous at 9:21:
    I'm sorry to report that it is not Mr Webber and I who don't fully understand how redevelopment takes money from school districts; it is you that either won't or can't understand this basic condition of redevelopment. California's public schools budgets suffered because of redevelopment.

    Re-printed from the 'Peninsula Blog':

    The California Supreme Court today cleared the way for the state to abolish redevelopment agencies, which many cities have used to spur the renewal of rundown neighborhoods.

    For months, leaders of the 399 redevelopment agencies in California nervously awaited a ruling on their appeal of Assembly Bill 26. The bill authorized eliminating the agencies and rerouting local property-tax revenues they would have captured. Gov. Jerry Brown’s proposed 2011-12 budget directs that money toward local public schools.

  6. Re-printed from 'Signon San Diego':

    Schools hope ruling won't lead to more cuts

    By Maureen Magee

    Thursday, December 29, 2011

    Schools throughout San Diego County and statewide are working to figure out what Thursday’s California Supreme Court ruling on redevelopment money means to their lean budgets.

    The court ruled the state could dissolve the local agencies that subsidize construction in blighted areas. Gov. Jerry Brown has argued that redevelopment money could better spent on schools and other agencies.

    Brown had been counting on $1.7 billion in redevelopment money to balance the state budget this year. He called the ruling a victory.

    “Today’s ruling by the California Supreme Court validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety,” Brown said in a prepared statement.

    Uncertainties linger over how the $1.7 billion will be spent this year and whether or not schools will once again be tapped for more cuts.

    “We are still analyzing this," said Bernie Rhinerson, chief of staff for the San Diego Unified School District. "We are hoping this is good news."

    The court’s ruling could mean more money for schools in the coming years from property taxes that would have otherwise gone to redevelopment agencies.

    Schools could be vulnerable to cuts this year if the state has no access to the $1.7 billion in redevelopment funds to balance this year's budget, said Ron Bennett, president of School Services of California, an education consulting firm in Sacramento.

    "Anything that makes the budget gap bigger is potentially harmful to schools. The state will now be down about $1.7 billion," Bennett said. "The big question is who gets the $1.7 billion if the state doesn't?"