By Margie Palmer | SDUN Reporter

The California Supreme Court has upheld the elimination of redevelopment agencies following the vote on Dec. 29, authorizing the redirection of approximately $1 billion from local municipalities. Those monies, previously collected by municipalities as property tax increment-revenue, will now be used by Sacramento to fund education and public safety.

California Gov. Jerry Brown applauded the Dec. 29 Supreme Court decision, calling it a win for education and public safety.
“[The] 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,” Governor Brown said in a statement.

Some local lawmakers are calling it the worst possible outcome.

District 3 San Diego City Councilmember Todd Gloria, whose district includes a number of Uptown neighborhoods, pointed out the purpose of redevelopment was to invest in blighted or deteriorating neighborhoods as a means of spurring revitalization. Gloria would have been the Chair of the Ad Hoc Committee on Redevelopment had the initial decision to ban the agencies been reversed.

Redevelopment money, Gloria said, was the reason the City was able to proceed with the type of projects that provide affordable housing, create jobs and increase retail opportunities, despite challenged economic conditions.

The California Redevelopment Association (CRA) sent out a press release following the ruling, in which they called the decision a “devastating ruling that could forever change the face of California communities and hamper job creation and economic advancement.”

Because of the decision, the CRA said, approximately 400 redevelopment agencies throughout the state, including those in San Diego, will be dissolved.

In July 2011, the CRA, League of California Cities, and the cities of San Jose and Union City filed a lawsuit with the California Supreme Court challenging the constitutionality of two assembly bills passed as part of the 2011-2012 state budget. The first, ABX1 26, called for the elimination of redevelopment agencies; the second, ABX1 27, would have required redevelopment agencies to pay $1.7 billion in the current fiscal year and $400 million to schools and special districts in subsequent budget years in order to retain existence.

The Court ruled that the state does have the authority to abolish redevelopment agencies, upholding the passage of ABX1 26. However, requiring them to redirect a portion of their budget to state treasury, as ABX1 27 outlined, was in direct violation of Proposition 22. Passed by voters in Nov. 2010, Prop. 22 banned the State from taking redevelopment funds from local municipalities.

San Diego County District Attorney Bonnie Dumanis said the decision is a major setback to local job creation efforts.

“Sacramento politicians should have left well enough alone and not interfered with a program that has successfully put local tax revenue to work locally, created jobs, and transformed our city for the better,” Dumanis said in a statement.

District 5 Councilmember Carl DeMaio agreed, citing a belief that the decision goes against the will of the voters who passed Prop. 22 “in an effort to preserve redevelopment projects,” he said in a statement.

“[The ruling] is the worst possible outcome as it completely eliminates redevelopment agencies and undermines our ability to invest in economically distressed neighborhoods,” DeMaio added. “[The] decision may also impact the City’s General Fund by more than $15 million a year, requiring additional cuts in our day-to-day budget.”

Gloria said his immediate concern for Uptown is millions of dollars that had previously been dedicated to restoring neighborhoods are no longer available.

“Redevelopment funds were used to restore the North Park Theatre, build the Urban Village in City Heights and had been able to [be] use[d] toward affordable housing projects,” Gloria said. “Affordable housing and bay front improvements are things that are going to be missed if we’re unable to find a way to fund them without [redevelopment funds] going forward.”