November 17, 2011

Redevelopment Update

Poway Blog has been on a bit of a hiatus while I attended to some family matters. But that doesn't mean that nothing has been going on during the last few months or that I haven't been paying attention.

One of my special areas of concern has been, and continues to be, redevelopment. As many of you may know, redevelopment plays a major role in many land use and budget decisions in Poway. It also has a huge impact on school financing and the state budget. Last January, newly elected Gov. Jerry Brown proposed eliminating redevelopment agencies in California. This kind of blew me away. I had been a critic of redevelopment for many years. I even wrote a letter to Arnold and sent it to him and all of the state legislators in June, 2009, suggesting that Arnold grab some money from the magical redevelopment agencies to balance the state budget. But I never dreamt that anyone would call for the demise of the goose that kept laying those golden redevelopment eggs.

Brown's plan to snuff out redevelopment agencies met a lot of resistance. With a few rare exceptions, GOP legislators were opposed, although technically. redevelopment doesn't line up with their supposed "values". Redevelopment is big government, intrusive government, secret government, with the power of eminent domain and, um, did I mention the excessive borrowing aka deficit spending ? There were also a few Democrats who couldn't really sign off on ending redevelopment, so the California legislature devised a way for redevelopment agencies to rise from the ashes and continue to borrow money and spend it on development projects. The catch was that they had to give billions of dollars to the local schools and local agencies, like fire departments, that are funded with property taxes. Considering that redevelopment agencies have stolen diverted billions of property tax dollars from schools for years, it seemed a pretty reasonable compromise. But the redevelopment agencies wanted it all. They went for broke. They sued the state.

Both the redevelopment agencies and the state agreed to have the case go directly to the state's supreme court. The court has agreed to decide the case before January 15th, when the first batch of payments from the redevelopment agencies are due to be turned over to a local authority that will distribute the money to local schools and special districts.

On October 10th, the California Supreme Court heard oral arguments in the case which is named CRA v Matosantos. The amicus briefs for each side are posted on the CRA's website. The ones that support the redevelopment agencies, claiming that the state cannot dissolve them or reconstitute them for a ransom, are: Association of California Cities, Orange County; City of Irvine; Long Beach; Public Interest Law Western Center, San Bernardino County, Southern California Coalition, CRA/LA, Riverside County and ABAG (Association of Bay Area Governments). With the exception of the Public Interest Law Western Center, each of these is, has, or represents a redevelopment agency.

The groups that filed amicus briefs in support of the state's position are: Affordable Housing Advocates (a San Diego group that advocates for affordable housing); California Professional Firefighters; Center for Constitutional Jurisprudence (an Orange County group from Chapman Univ School of Law); California Teachers Association; Los Angeles USD; MORR- Chris Norby, and Santa Clara USD. The groups supporting the state's position represent school districts, firefighters, affordable housing advocates, the Center for Constitutional Jurisprudence (a conservative group concerned about the abuse of eminent domain) and MORR (Municipal Officials for Redevelopment Reform).

The redevelopment agencies sued the state , claiming that both ABx-26 which dissolved redevelopment agencies and ABx-27, which allowed for the new alternative redevelopment agencies that voluntarily paid a ransom to the local schools, were unconstitutional. They claimed that the voters passed Prop 22, which forbids the state from grabbing any of their redevelopment money. From the comments at the supreme court hearing, it appears that the justices seem to lean toward the position that the state has the right to abolish redevelopment agencies, that ABx-26 is constitutional.

The question then becomes, "Is ABx-27 constitutional - can the state make the redevelopment agencies give a share of their diverted property taxes to the schools in order to continue to exist?" If the answer is yes, then the redevelopment agencies lose and the state wins the case. But what if the courts find ABx27 unconstitutional? This is where it gets really interesting.
Justice Joyce L. Kennard suggested that the agencies' challenge of both laws could backfire. She said the court could find the abolition constitutional but the revenue-sharing law invalid, a prospect that an attorney for redevelopment agencies called the worst possible outcome.

If the court finds ABx-27 unconstitutional, then everything would revert back to ABx-26 and the redevelopment agencies would all be dissolved. Redevelopment in California would be no more. And it would be because of this court case and Prop 22, a sneaky voter initiative that redevelopment agencies pushed to get on the ballot and passed in 2010.
Justice Marvin R. Baxter observed that it would be ironic if Proposition 22, which redevelopment agencies had promoted, ended up requiring the court to overturn the compromise and cut the lifeline that the revenue-sharing law provided. Baxter also appeared dubious that the proposition gave the agencies "perpetual existence."

Deputy Atty. Gen. Ross C. Moody, representing the state, agreed that the agencies may have miscalculated in suing to overturn both measures.

"The redevelopment agencies took a gamble on this lawsuit," Moody said

Remember, the redevelopment agencies did not have to file this lawsuit. They chose to. They are not accepting the lose, lose position. Redevelopment agencies are now arguing that ABx-26 and ABx-27 cannot be considered separately, that they are intricately woven together.
The back-and-forth in the San Francisco courtroom seemed to hint that the justices are grappling less with whether the Legislature has the power to abolish RDAs -- a power that the Court seems poised to uphold -- and more with whether the budget provisions that dissolve and then reconstitute RDAs are, as the attorney for the locals argued, "joined at the hip."
The redevelopment agencies are now arguing that comments from some legislators indicated that they only voted for ABx-26 because there was also an ABx-27. Therefore, if either one is unconstitutional, they both are. But that argument seems particularly weak, since the laws actually say that they are separate.
Legislators wrote language stating the two are separable -- a point raised in a pointed exchange led by Justice Goodwin Liu. "How could it be any clearer?" said Liu after reading the relevant passage from the legislation.
This is all good news, hopeful news, for redevelopment watchers. The sad part is that the taxpayers are paying for both sides of this court case. The sadder part is that all 5 of Poway's council members strongly support the redevelopment agencies' case and the diversion of property tax funds from PUSD and special districts.

The California Supreme Court expects to rule on the constitutionality of ABx26 and ABx27 by mid-January 2012.


Anonymous said...

Thanks for the update. Is the City of Poway providing any money directly, or through one of these organizations, to fight the state on this issue?

PowayBlog said...

The state is being sued by California Redevelopment Association (CRA) and the League of California Cities. Poway's Redevelopment Agency is a member of CRA and the City of Poway is a member of the League. Membership fees for both organizations fund their legal challenges. I'm not sure exactly how much Poway pays in membership fees. I will see if I can find that information.

NEWS FLASH said...

As mentioned in a POWAY BLOG comment from several months ago, I always wondered when Californians would wake up to reality regarding REDEVELOPMENT.


The initial purpose of California’s REDEVELOPMENT AGENCIES (RA) was a noble one. The overall goal was to have local cities create their own local agency --- funded with incremental property tax dollars --- to cure local “blight” problems.

Unfortunately, with very little oversight, and LOTS of loosey-goosey dollars in a local “slush fund”, the RA system became ripe for waste, corruption, conflicts of interest and abuse by slimy local politicians. The RA system has enriched an army of savvy/greedy lawyers, bond brokers, consultants and developers.

Meanwhile, as stated in “REDEVELOPMENT: THE UNKNOWN GOVERNMENT” (see link to PDF below), the RA system --- including right here in good ol’ Poway --- “…has become a rapidly growing drain on California’s public resources, amassing enormous power with little public awareness or oversight.”

Please see links below to an invaluable and insightful short resource booklet, “REDEVELOPMENT: THE UNKNOWN GOVERNMENT” and two interesting newspaper columns from Steven Greenhut.


Written by Chris Norby, a former supervisor in Orange Co. and currently a California State Assemblyman (72nd District). This is a quick read (43 pages) and has several great cartoons. It gives a great background on Redevelopment Agencies, how they operate and why these agencies have created huge problems for California (and why cities are addicted to Redevelopment $$$ and RA operations with their inherent lack of citizen oversight).


Also, interested POWAY BLOG readers may want to check out two recent columns from the NORTH COUNTY TIMES (links below) regarding the many pitfalls of the RA system. Both columns were written by Steven Greenhut, director of the Pacific Research Institute's journalism center.