Penny wise and pound foolish, the elimination of redevelopment agencies equates to the elimination of a vital investment vehicle that boosts the economy and provides jobs, both of which are sorely needed in the state of California. From the get-go, local governments were continually in a defensive position in 2011 and it appears that positioning will extend into 2012 in the aftermath of the Supreme Court’s ruling on redevelopment. The new year is starting off from a point of weak negotiating power for cities as they look to salvage what’s left of redevelopment. While the outcome of the lawsuit was the latest twist in ongoing budget battles, plenty of questions still remain about what’s next for the fate of over 400 agencies, payment of their debts, ongoing commitments, and current status of funds.
The California Redevelopment Association (CRA) and League of California Cities (League) vowed to work with state legislators immediately to develop legislation to revive redevelopment in order to protect local communities, job creation and our economy. Chris McKenzie, Executive Director of the League of CA Cities said: “Redevelopment is indispensible to cities to spur economic development, create jobs and improve communities. We know legislators recognize that and we hope they’re willing to work with us to reinstate redevelopment. We want to work as partners with state lawmakers to revive this tool in an accountable manner.”
Even though the State Supreme Court ruled that the abolishment of agencies is a "proper exercise of legislative power,” it’s worth remembering that the Legislature rejected the outright elimination of agencies under an initial budget proposal from the governor. So if the intention of the Legislature was not to seek the abolishment of the agencies, it may indicate there is some willingness to save the agencies and come up with a mechanism that would allow RDAs to continue while taking into account the budget difficulties at the State level.
However, the governor may not share the same willingness to revive RDAs. The Administration has posited that schools and public safety should be a higher priority for local property tax dollars. The governor released the following statement after the court’s decision: “[Thursday’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.”
If RDAs are allowed to continue, it may be safe to assume their form would be different than before. The court was particularly critical of Prop 22’s influence over the authority of redevelopment, as the decision reads:
“Had the voters in fact intended to amend the Constitution to fundamentally alter the relationship between the state and this class of political subdivision, we would, moreover, expect to find at least a single mention of such an intention in the various supporting and opposing [Prop 22] ballot arguments. Instead, we find silence.”
With respect to economic development, Speaker Perez released the following statement:
“The Supreme Court validated the Legislature’s action to eliminate existing Redevelopment Agencies, but we are disappointed that they blocked the creation of smaller, more targeted redevelopment agencies that fully funded affordable housing.With Republicans refusing to approve badly needed revenue increases, the Legislature’s action on RDAs became one of many necessary components to balance the $26 billion budget shortfall resulting from the Great Recession. Despite the Court’s action blocking our creation of the smaller RDAs that protected affordable housing funding, we remain committed to finding affordable housing solutions and making smart economic development investments in our local communities.”
You can read the full ruling here.