Update 1/4 4:00 PM – San Jose and Mayor Chuck Reed appear ready to fight Governor Brown in order to keep redevelopment dollars intact if Brown’s idea gets past a conceptual stage.
Austerity, thy name is Jerry Brown. As part of the newly sworn-in governor’s agenda to reduce the $25-28 billion state deficit, massive cuts are in store for social services, the University of California and California State University systems, and just about everything else that is state funded.
Robert Gammon thinks this is bad news for any Victory Court ballpark plans, since Brown is looking to eliminate redevelopment agencies as well. Remember that while $750,000 has been authorized for an EIR, nothing has been authorized or raised (via bonds) for further land acquisition or infrastructure work. That part, which is estimated to run $100 million or more, would be unavailable in as little as 12-18 months if redevelopment agencies were killed or if their tax increment funds were diverted to help shore up the budget.
Gammon is unclear whether Brown would try to fight this battle via legislation or some other method. Redevelopment can be viewed in two ways: generally bloated and ineffectual, yet also important for some ongoing smaller projects in many cities throughout the state. Since redevelopment money has more of an indirect benefit for citizens than, say, funds for Cal Grants or Medi-Cal, it’s likely to be less of a hot button issue, which could make it a more likely candidate for the chopping block. However, redevelopment agencies are empowered through Article 16 of the State Constitution, which makes it difficult to see how Brown could do it alone, unless he declared some sort of fiscal “state of emergency” early on in his term and tried to carry out his agenda via fiat. It’s possible that a bill to accomplish this could “sail” through the legislature, but would a referendum be required as well?
Also threatened are enterprise zones, areas designated by cities as economic incubators and eligible for tax credits as a result. Elimination of enterprise zones could raise the price tag on relocation since it’s likely that Oakland/ORA is looking at some of those areas as places where the existing businesses at Victory Court could relocate, with tax credits as an enticement.
Would Brown’s cuts have an effect on San Jose’s ballpark efforts? Perhaps. SJRA’s practice of landbanking has allowed it to use money it raised many years or even decades ago to help fund new projects. With the threat of Brown curtailing SJRA activities severely if not outright, it’s possible that they may see the writing on the wall and sell off various accrued assets to keep existing projects funded or to shore up the agency’s own budget. Better that than for the state to grab the land and sell it on its own, I suppose. Already, SJRA has redone the Airport West deal to suit Lew Wolff’s sliding schedule. They’ve also agreed to sell the long dormant Brandenburg site near downtown to developer Barry Swenson in order to finish a street grid/park project in the North San Pedro area. Going back to the process of killing redevelopment, imagine a June ballot in San Jose with a ballpark initiative and a statewide proposition to eliminate redevelopment agencies. Yikes.
This early on, it’s hard to say how the redevelopment battle will go. Agencies have their own lobbying group and there will be plenty of cities with large agencies who will be steadfastly against such a raid. Lawsuits would be almost guaranteed, as they would be from various other threatened state agencies. Most redevelopment agencies have some ongoing indebtedness, so what happens if their siphon is cut off? Default? Already, CRA is appealing a decision which approved Governor Schwarzenegger’s $2 Billion raid in 2009-10. We’re in for a bumpy ride, folks.