Official: Redevelopment is DEAD
This story will be updated throughout the day as analyses and reactions come in.
- Howard Mintz, Mercury News - California Supreme Court allows redevelopment money grab
- Maura Dolan, LA Times - State Supreme Court upholds abolition of redevelopment agencies
- Roger Showley, SD Union Tribune - Redevelopment dead, court says
- Reaction from cities (via BANG)
- John Myers, KQED - California Supremes Rule, Redevelopment is History
- Robert Gammon, East Bay Express - The Hidden Costs of Jerry Brown’s Plan (from January)
- Craig Gustafson, SD Union Tribune – San Diego leaders eye new law to save redevelopment
Added 3:37 PM – A brief blurb of my interview with KQED-FM is now up.
Added 3:40 PM – Fremont Mayor Bob Wasserman passed away today at the age of 77. Condolences go out to his family.
The Supreme Court just came down with an 83-page ruling on the legality of ABX26 and 27, the redevelopment killing and reforming bills passed during the summer budget battle. Here’s the nitty gritty:
We consider whether under the state Constitution (1) redevelopment agencies, once created and engaged in redevelopment plans, have a protected right to exist that immunizes them from statutory dissolution by the Legislature; and (2) redevelopment agencies and their sponsoring communities have a protected right not to make payments to various funds benefiting schools and special districts as a condition of continued operation. Answering the first question “no” and the second “yes” we largely uphold Assembly Bill 1X 26 and invalidate Assembly Bill 1X 27.
Assembly Bill 1X 26, the dissolution measure, is a proper exercise of the legislative power vested in the Legislature by the state Constitution. That power includes the authority to create entities, such as redevelopment agencies, to carry out the state‘s ends and the corollary power to dissolve those same entities when the Legislature deems it necessary and proper. Proposition 22, while it amended the state Constitution to impose new limits on the Legislature‘s fiscal powers, neither explicitly nor implicitly rescinded the Legislature‘s power to dissolve redevelopment agencies. Nor does article XVI, section 16 of the state Constitution, which authorizes the allocation of property tax revenues to redevelopment agencies, impair that power.
A different conclusion is required with respect to Assembly Bill 1X 27, the measure conditioning further redevelopment agency operations on additional payments by an agency‘s community sponsors to state funds benefiting schools and special districts. Proposition 22 (specifically Cal. Const., art. XIII, § 25.5, subd. (a)(7)) expressly forbids the Legislature from requiring such payments.
Matosantos‘s argument that the payments are valid because technically voluntary cannot be reconciled with the fact that the payments are a requirement of continued operation. Because the flawed provisions of Assembly Bill 1X 27 are not severable from other parts of that measure, the measure is invalid in its entirety.
In short, the Court ruled that redevelopment was created by the legislature, so it can be taken away by the legislature at any point. This is the worst possible outcome for redevelopment agencies all over the state. They are effectively dissolved and have no mechanism for reconstituting themselves.
What does this mean for the various cities? Let’s do a roll call:
- San Jose Redevelopment Agency is done. Dead. The agency owed the City $80-90 million and that’s gone. Start the procession.
- San Jose Diridon Development Agency exists in a sort of gray area. Its charter is to oversee development in its defined area and it controls land, but it is not expressly a redevelopment agency. We’ll see if it gets (and withstands) any legal challenges in the future. As long as Lew Wolff maintains his stance that he can pay for the rest of the land/infrastructure and, more importantly, follows through on that pledge, the ballpark project is safe. Unfortunately for Wolff, the price tag continues to grow.
- Oakland’s plans for Coliseum City and Victory Court have to go back to the drawing board, because they were largely dependent on ABX27 passing so that they could continue operation. Now that redevelopment is dead, they’ll have to come up with extremely creative ways to fund their infrastructure projects, and considering how large they are ($250 million for VC, a similar or greater amount for CC) there’s no telling how they’ll do it. That $36 million reserve that Mayor Jean Quan was crowing about? That’s all they have at this point.
- Santa Clara is safe simply because they got a bunch of contract and lending stuff done before the end of the year. Now their only worry is the fact that their Stadium Authority is liable for $850 million in loans, despite assurances from the 49ers and NFL that they’ll take care of debt service.
- Sacramento is in a slightly more advanced position than Oakland, because they’ve been exploring alternative ways to finance a Kings arena, such as selling advance parking revenue.
- The downtown LA football stadium, Farmers Field, was not dependent on tax increment or redevelopment funds. It was to be paid for by increased convention center use and other events at the domed stadium.
- The City of Industry football stadium was originally highly dependent on redevelopment money (mixed use). I had heard that the funding mix had been altered in light of the new political realities. It seems that with each passing month this project slips further into oblivion.
- San Diego’s football stadium was also expected to use redevelopment funds. It’s hard to see how they’ll pull it off now.
- Escondido’s AAA ballpark plan for the Padres is dead.
The only hope redevelopment has now is to lobby hard in Sacramento to reform it through the legislature. At this point, there’s no telling how or when that will happen. During the oral argument, the justices talked about a system in which projects would be voted on by their communities. That may be the future of redevelopment, not the mostly unchecked power of the past. It’s a new day in California. Good luck getting your stadium built.
Who said there’s no news at the end of the year, eh?
Note: I did an interview with KQED-FM shortly after the ruling was handed down. Hopefully part of it will show up later today or tomorrow.
P.S.: I have to clip something off the last Baseball Oakland post, full of sunshine and unicorns:
One final point about the money that would be used for Oakland’s plan. Much of it would come from redevelopment funds. Some of you might be concerned that the state will all destroy redevelopment agencies. However, I asked Fred Blackwell about this at the end of the press conference. He explained that, based on the expected upcoming ruling of a lawsuit filed by California’s cities, redevelopment agencies will continue to exist as normal and everything around ballpark financing would go as planned. If the cites lose, then they will have to make a payment to the state. Blackwell says that Oakland plans on making its payment and still can issue the needed bonds to complete its proposed projects. So, any concerns about the death of redevelopment agencies should alleviated.
Everything’s gonna be fine. Right?