As of press time on Jan. 24, hundreds of cities, redevelopment agencies, and labor groups across California were still waiting to hear the outcome of S.B. 659, emergency legislation aimed at postponing the dissolution of more than 400 redevelopment agencies.
The bill is the most recent Band-Aid slapped on the festering wound that is the relationship between state and city governments.
Introduced by state Sen. Alex Padilla (D-Los Angeles), the bill would extend the Feb. 1 deadline for closing the agencies to April 15, and give the agencies more time to figure out what to do with their existing development projects, assets, and liabilities.
City councils up and down the Central Coast, including those in Santa Maria, Lompoc, and Buellton, have already voted to dissolve their redevelopment agencies and take on any outstanding responsibilities, but the extension would give officials more time to comply with the law.
Gov. Jerry Brown first proposed disbanding redevelopment agencies in January 2011 as a way to balance the state’s continually precarious budget. Brown and his proponents argued the agencies—which were created after World War II to oversee the revitalization of blighted neighborhoods and to create jobs—have become increasingly negligent with taxpayers’ money.
Brown’s proposal triggered widespread outrage from city officials and labor representatives, who viewed it as another money-grubbing ploy from the state. As a compromise, the state Legislature in June passed ABx126, a bill calling for the elimination of redevelopment agencies, along with ABx127, a bill that stipulated agencies could be reinstated if they agreed to pay the state $1.7 billion to help fund schools and other public services.
But that wasn’t enough of a concession for the California Redevelopment Association (CRA) or the League of California Cities, which promptly filed a joint lawsuit challenging the legislation’s constitutionality. That lawsuit culminated in December 2011 with the California Supreme Court upholding ABx126, but not ABx127—an unexpected outcome, according to Lompoc Mayor John Linn.
“Neither side thought this was going to be the outcome and now nobody knows what to do,” Linn told the Sun. “Luckily, [the city of Lompoc] was very conservative with its RDA projects, so we’re not in that much trouble.”
As it stands, the city is in the hole for roughly $150,000 because of an existing city loan taken out by the Lompoc RDA. Redevelopment projects, including the senior housing facility and the Charlotte’s Web library project, will be put on hold indefinitely.
The city of Santa Maria won’t get off as easy. Event though the last redevelopment project was completed in the 1990s, the city is still paying off approximately $2.7 million per year in loan debt. Originally that debt was split between the city and the redevelopment agency, but with the elimination of RDAs, the city is now stuck with the entire bill.
“[The money is] going to have to come from somewhere. The bad news is it’s more than likely going to come from the general fund, which has already been suffering significantly. The last thing we need is another reduction to it,” city spokesman Mark van de Kamp said, adding that the city stands to lose close to $14 million in loan repayments from the redevelopment agency.
Still, it could be worse.
Numerous redevelopment agencies across the state have projects currently in the works, as well as a staff of people hired specifically to manage them. When the dissolution deadline comes, construction will halt on those projects and hundreds of people will be unemployed.
The two Central Coast cities facing the biggest fallout from ABx126 and ABx127 are arguably Atascadero and Goleta. The city of Atascadero has been using RDA funds to remodel its historic administration building and to build a pedestrian bridge downtown. Goleta has been using RDA funds to revitalize Old Town.
But even if SB659 fails and ABx126 goes unchallenged, the state will still receive $1 billion in property taxes because the redevelopment agencies won’t be around to claim the money—a fact that could prompt many cities and organizations to seek additional legal action.
“ABx126 is badly flawed. It’s just a large number of inconsistencies, ambiguities, errors, and omissions that desperately need to be fixed,” CRA Executive Director Jim Kennedy said, adding that the organization is doing everything in its power to keep redevelopment agencies afloat.
Contact Managing Editor Amy Asman at aasman@santamariasun.com.
This article appears in Jan 26 – Feb 2, 2012.