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State Supreme Court Upholds Abolishment of Redevelopment Agencies

Culver City Mayor Micheal O’Leary said the ruling will have a “disastrous effect” on local projects.

The California Supreme Court today upheld a new state law abolishing the Los Angeles Community Redevelopment Agency and hundreds of similar agencies across the state, but ruled that a companion law forcing CRAs to give a portion of their tax revenues to the state was unconstitutional.

Since the court ruling aborted the plan to allow local governments to buy back into redevelopment, the agencies will be phased out when their contracted projects are completed.

The agencies not only fund major building projects, but they also spend 20 percent of their income on affordable housing. Among the projects in Culver City directly affected by this decision are the city’s downtown  project and two affordable housing projects in the city.

In handing down its unanimous ruling, the court stated that the state had the right to dissolve redevelopment agencies "when the Legislature deems it necessary and proper.''

However, six of the court's seven justices agreed that Proposition 22, passed by voters in March, forbids the state from forcing municipal agencies to transfer money to the state, and ruled the law invalid.

Chief Justice Tani Cantil-Sakauye said the law does not "compel'' community redevelopment agencies to violate Proposition 22. Redevelopment agencies are funded by the increase in tax revenues generated by projects in their areas. The agencies use the revenue to invest in additional projects mainly in blighted parts of cities.

On hearing the court’s decision, Mayor Micheal O’Leary told Patch, “This ruling is the worst possible result and will have a disastrous effect on our planned development of areas such as Parcel B, Washington/Centinela and Washington/National. In addition to that, think of all the jobs that will be lost. I do not believe that this was the intent of the Legislature and look to them to act swiftly before the damage is irreparable.”

City Councilmember Andrew Weissman also said, “It’s an absolutely horrible result as far as Culver City is concerned. I don’t think there’s any way to overstate how important redevelopment has been here. Culver City is one of the poster children for how redevelopment was intended to work and a real example of redevelopment done properly. It’s just mind boggling to think of the things Culver City won’t be able to do unless the legislature acts quickly to reinstate the eligibility of redevelopment agencies.”

Weissman also noted that there’s a great deal of uncertainty regarding the whole decision. 

“My assumption as to what was intended by ABX1 26 is that redevelopment was eliminated in California and any assets owned by RDA’s are in effect forfeited back to the state.”

He said if that’s the case then municipalities will simply be out of the loop when it comes to what now happens to those properties.

“There’s certainly the potential for legal challenges that will ensue insofar as the nature of what I’m terming a forfeiture,” he said. “I don’t know if that’s the correct term,” he added, “but that’s the impact.”

Of the projects that could directly be affected by the ruling, Weissman said he believed that the  project  - a 33-unit affordable housing development - was probably “well enough down the road” where it may not be in jeopardy. “But,” he added, “I really don’t know how it’s going to work if it’s no longer owned by the redevelopment agency.”

With so many questions and so few answers at this stage, Weissman noted that, “After the mass hysteria abates, there’s going to be a lot of energy expended trying to figure out what to do next, what we can do next and whether we’ll be able to do anything next.”

The California Redevelopment Association and League of California Cities issued a statement following the decision, vowing to work with state legislators to develop legislation to revive redevelopment in order to protect local communities, job creation and the economy. 

CRA President Julio Fuentes said in the statement, “Without immediate legislative action to fix this adverse decision, this ruling is a tremendous blow to local job creation and economic advancement. The legislative record is abundantly clear that Legislators did not intend to abolish redevelopment.  We hope to work with state lawmakers to come up with a way to restore redevelopment.”

Assemblymember Luis Alejo noted in the statement, “I’ve seen firsthand the benefits of redevelopment in my district. When I voted for the budget last June, I did so with the intent that redevelopment agencies in my district and throughout the state would continue to operate, continue to produce jobs and boost local economies. Today’s ruling essentially kills redevelopment and I plan to start off 2012 by collaborating with my colleagues to restore redevelopment. We need it in California.”

Read the full statement from the CRA and the League of California Cities in the PDF document to the right of this article.

The ruling does, however, have the support of Gov. Jerry Brown who said the money would be better used to fund schools and other municipal functions during tight budgetary times.

Board of Supervisors Chairman Zev Yaroslavsky also supported the court’s decision and issued a statement that said in part, “Decades ago, redevelopment was a sound idea designed to invigorate blighted communities within our cities and counties.  Unfortunately, over the years it evolved into a honey pot that was tapped to underwrite billions of dollars worth of commercial and other for-profit projects that had nothing to do with reversing blight, but everything to do with subsidizing private real estate ventures that otherwise made no economic sense.”

Read Yaroslavsky's full statement in the PDF document to the right of this story.

 - This article was compiled with information from City News Service

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George Laase December 30, 2011 at 12:32 AM
The High Court's decision also should mean the state will not be getting the $1.7B paid by the local RDAs to help balance the state's overly optimistic budget. Will this force new triggers on state funding foe Education? What's going to happen to the annual $1.2M the Culver City RDA usually gives our local Culver City Unified School District, if the CCRDA is disbanded?
Dennis Sluman December 30, 2011 at 01:04 AM
Thank you Democrats!

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