CA High Court Upholds Abolishment of Redevelopment Agencies
By EGP & City News Service
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.
The ruling was a major blow to redevelopment agencies, which sued earlier this year to block both laws. 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 California Redevelopment Association and League of California Cities, the plaintiffs in the lawsuits, called on lawmakers “immediately” to develop legislation to revive the agencies.
“Without immediate legislative action to fix this adverse decision, this ruling is a tremendous blow to local job creation and economic advancement,” said association board president Julio Fuentes, adding that it was not the Legislature’s original intent to completely abolish the agencies.
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.
The agencies not only fund major building projects, like a proposed a new art museum, apartments and park in downtown Los Angeles, but they also spend 20 percent of their income on affordable housing.
The court was unanimous in its opinion 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 dissented on that point, saying the law does not “compel” community redevelopment agencies to violate Proposition 22.
Supporters of the agencies argue they are the best economic development tool to catalyze redevelopment projects that private investors would otherwise not build.
Cities like Bell Gardens use the funds to help finance job creating projects, such as the Los Jardines shopping Center which has attracted new businesses to the low-income area, Councilwoman Jennifer Rodriguez told EGP in the past.
The city has also used the funds to build low-0ncome housing for seniors, according to Phil Wagner, Bell Gardens new city adminsistrator.
Gov. Jerry Brown hailed the court’s ruling, saying that it “validates a key component of the state budget and guarantees more than $1 billion of ongoing funding for schools and public safety.”
County Supervisor Zev Yaroslavsky also applauded the court’s decision. He said the agencies long ago stopped being a catalyst to reinvigorate blighted neighborhoods.
“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,” Yaroslavsky said.
Others called the ruling disastrous for low income housing.
“The ruling means that probably 25 percent of the citizens of Los Angeles who are rent burdened, paying above 30 percent of their income for rent, are going to continue not to be able to afford where they live,” said Paul Zimmerman, executive director of the Southern California Association of Non-Profit Housing. “They’ll be making decisions to pay rent or pay for medical care, food or other basic needs.”
“There is virtually no evidence from past periods that the private marketplace can produce housing that is affordable to 25-30 percent of the families in Los Angeles,” Zimmerman added.
A number of cities, including cash strapped Montebello, have re-worked their budgets to come up with funds to send to the state in order to hold on to some portion of the redevelopment funds to use on future projects.
Earlier in the year a number of cities hurriedly allocated their existing pool of redevelopment funds to projects that in some cases were years off in the future, but fast-tracked hopes of preventing the state from taking the money.
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December 29, 2011 Copyright © 2012 Eastern Group Publications, Inc.
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