Capitol Alert

The latest on California politics and government

April 25, 2014
California city appealing after redevelopment court defeat

LS MERMAIDS 17 dive bar.JPG

The city of Brentwood will ask an appellate court to overturn a judge's ruling against a city lawsuit challenging the state's ability to "claw back" former redevelopment money.

The case is one of several post-redevelopment lawsuits that have significant fiscal implications for the state. State officials, including Gov. Jerry Brown, have warned that legal losses could cost it more than $3 billion.

In the Brentwood case, the city challenged a central part of the 2011 law dissolving the anti-blight program. It allowed the state to "claw back" money transferred by redevelopment agencies to their sponsoring cities or counties from Jan. 1, 2011 to Feb. 1, 2012, when redevelopment ceased to exist.

In a December tentative ruling, Sacramento County Superior Court Judge Allen Sumner said that provision was unconstitutional. State officials disagreed and in a subsequent court filing said the tentative ruling — if upheld — would create a precedent and prompt a flood of local government demands to reclaim redevelopment money.

The judge ruled in favor of the state earlier this month.

"The court did a 180," attorney Leah Castella, the special counsel to the city on the case, said this week. "We hope the appellate court will see things the way we do."

PHOTO: A mermaid swims in the aquarium at Sacramento's Dive Bar in 2011. Redevelopment helped finance the business. The Sacramento Bee/Lezlie Sterling

December 12, 2013
Urban Land Institute wants to recreate California redevelopment

redevelop.JPGHaving repealed the redevelopment authority of local governments two years ago, the state needs to implement an alternative method for improving communities and financing infrastructure and lower cost housing, the Urban Land Institute's California chapters say in a white paper.

And it can be done, the 22-page document says, without threatening the operational finances of local and state governments.

When Gov. Jerry Brown and the Legislature abolished the six-decade-old redevelopment program, under which local governments could put together projects and collect the incremental tax revenues from their construction, they cited its effects on the state treasury.

Local government redevelopment agencies were taking about $5 billion a year, roughly 10 percent, off the top of the statewide property tax pool and the state was being forced, under a ballot measure enacted in 1988, to make up about $2 billion a year of that diversion to local schools.

Since then, the local redevelopment agencies' finances have been unwound, although a number remain to be phased out, and uncommitted assets have been dispersed to other taxing agencies. However, there have been a number of lawsuits filed over how the shutdowns have occurred.

August 14, 2013
Steinberg still trying to get California environmental law deal

JM_INFILL_TERRASSA_BUILD.JPGSenate President Pro Tem Darrell Steinberg told his fellow legislators Wednesday that he's still trying to find a middle ground on reforming the California Environmental Quality Act, but he's determined to enact something by the end of the legislative session next month.

"Let's get something done," Steinberg told the Assembly Local Government Committee.

On a 5-0 vote, the committee approved the current version of his reform measure, Senate Bill 731, on assurances that it's a "work in progress."

The current version still lacks support from business groups and some local governments seeking big changes in the four-decade-old law and union and environmental groups that oppose big changes. Gov. Jerry Brown has also made CEQA reform a major cause and has given Steinberg his own list of reforms.

July 18, 2013
California redistributes $4 billion in redevelopment funds

HA_SCHOOL_BUS2565.JPGThe erasure of California's local redevelopment agencies and the redistribution of their revenues and assets resulted in nearly $4 billion in payments, according to a new report from the state Department of Finance.

K-12 schools and community colleges received about $1.5 billion from the redistribution. That indirectly lowered their payments from the state's general fund -- the main rationale for dissolving the local redevelopment agencies.

Most of the redevelopment agencies had been operated by cities, which also received redistributed funds, as did school districts, counties and special districts. Cities got $605 million, the report said, and counties $862 million.

The report lists payments to each local government and school district, along with county totals. Agencies in Los Angeles County, which contains about a quarter of the state's population, received $1.1 billion in redistributed funds.

PHOTO: Students get off a school bus at Pleasant Grove High School in Elk Grove on Friday, Feb. 20, 2009. The Sacramento Bee/ Hector Amezcua

July 30, 2012
End-of-session bill would designate money for 49ers stadium

Sen. Elaine Alquist of Santa Clara is jumping into a fight between the 49ers football team and education leaders in her Bay Area community by writing a bill that would allocate $30 million in disputed redevelopment funds toward building a new NFL stadium.

The bill marks the third time in recent years that California lawmakers have written custom legislation at the end of session to advance football stadium projects. Last year, the Legislature approved a bill that provided a speedy environmental review process for a new stadium in Los Angeles. A 2009 bill protected a proposed stadium in the City of Industry from environmental lawsuits.

Alquist's bill is fallout from Gov. Jerry Brown's decision last year to dissolve redevelopment agencies. Santa Clara's redevelopment agency had planned to give $30 million toward the $1.2 billion effort to build a new stadium for the San Francisco 49ers. A county oversight committee created after the redevelopment agency folded decided last month not to use the money for the stadium and instead give it to schools.

April 27, 2012
Wipeout of California's redevelopment continues to reverberate

The abrupt demise of local government redevelopment agencies due to legislative action and a state Supreme Court decision also means the end of the California Redevelopment Association.

The 33-year-old organization has been the Sacramento lobbying operation for the 400-plus local redevelopment agencies, fighting to keep the program alive in the face of political and media criticism.

"With the dissolution of local redevelopment agencies as of Feb. 1, it has become clear to the board and executive staff that the business plan for CRA is no longer sustainable," the organization's interim leadership said in a statement earlier this month.

March 26, 2012
Assembly passes bill to spend redevelopment funds for housing

About $1.4 billion in redevelopment funds for low- and moderate-income housing would continue to be spent for those purposes under legislation approved today by the Assembly.

Assembly Speaker John A. Pérez crafted the legislation, Assembly Bill 1585, to help ease the transition in the wake of last year's decision to dissolve local redevelopment agencies in capturing funding for state coffers.

AB 1585 was approved by the Assembly, 56-7, receiving two more votes than the supermajority required for passage as an urgency measure.

Five Republicans bucked their GOP colleagues to vote yes: Cameron Smyth of Santa Clarita, Nathan Fletcher of San Diego, Katcho Achadjian of San Luis Obispo, Jeff Miller of Corona, and Kevin Jeffries of Lake Elsinore.

Perez's bill would take effect immediately if passed by the Senate and signed by Gov. Jerry Brown.

A key element of AB 1585 would transfer balances in redevelopment low- and moderate-income housing funds to local housing agencies to be spent for affordable housing.

The bill provides an incentive for local government to allocate the housing funds relatively quickly: 80 percent of the money must be committed within two years and spent within four years.

Funds that remain uncommitted after four years must be transferred to the state Department of Housing and Community Development for use on low-income housing programs in the county from which they came.

Absent AB 1585 - or similar legislation -- the $1.4 billion would be spent on other local government services as redevelopment agencies dissolve, according to a legislative analysis of the bill.

Pérez's measure now goes to the Senate.

* Corrected at 5:10 p.m. to show that five Republicans voted yes, not four. The fifth was Kevin Jeffries of Lake Elsinore.

March 7, 2012
Redevelopment's demise leaves CA housing money in limbo

When more than 400 local redevelopment agencies in California went out of business this year, thanks to state legislation and a Supreme Court decision, it stranded as much as $2 billion in funds that had been set aside for low- and moderate-income housing.

The funds had been accumulated from a 20 percent set aside of property taxes that redevelopment agencies had collected in their project areas -- money that housing advocates often complained was being stockpiled rather than spent on housing projects.

What happens to that money -- whether it will spent on housing or join other redevelopment agency funds to be redistributed to schools and local governments -- is one of the issues left over from redevelopment's demise.

Housing advocates want the money retained for their projects, but it's uncertain whether they will prevail.

As Gov. Jerry Brown sought to phase out redevelopment, he originally proposed that the housing money should be kept intact for that purpose. But when the Legislature passed a bill to that effect, Brown vetoed it, saying it was premature because the entire issue was then before the state Supreme Court.

This year, after the Supreme Court ruled that redevelopment agencies could be abolished, the state Senate passed Senate Bill 654, which would keep the housing money intact. The bill, carried by Senate President Pro Tem Darrell Steinberg, is now pending in the Assembly.

The question arose again Wednesday when two Assembly committees staged a lengthy hearing on what, if anything, will be done to replace redevelopment as a local government tool.

Pedro Reyes, the chief deputy director of Brown's Department of Finance, was asked pointedly about the fate of the housing money and he replied, cryptically, "Unencumbered money is supposed to be swept (distributed to other governments)."

That left legislators and housing advocates wondering whether Brown would sign or veto SB 654 if and when it reaches his desk.

January 3, 2012
Redevelopment decree will touch off political frenzy

The Supreme Court's decree that Gov. Jerry Brown and the Legislature legally abolished redevelopment will touch off a political feeding frenzy.

While city officials who control more than 400 local redevelopment agencies push Brown and the Legislature to keep them alive, a convoluted process for winding down the agencies will begin, as Bill Fulton, publisher of the California Planning and Development Report newsletter, lays out in a lengthy blog entry.

"The Supreme Court's redevelopment ruling...didn't just kill redevelopment agencies," Fulton, an expert on local development issues, writes. "By upholding...the kill-redevelopment bill...the court ruling also triggered an entire funeral procession that will shut the agencies down and transition their debt and their assets to other agencies.

"That process is sure to trigger more controversy - and probably lots more litigation - as cities try to protect assets they transferred away from RDAs last year and other agencies - the state, counties, and school districts - try to grab hold of them. It also puts each county's auditor-controller in the middle of this process. But AB 1x 26 essentially represents a state takeover of tax-increment funds that are not required to pay debt by giving enormous power in the process to the Department of Finance."

Fulton goes on to speculate how a newly created "oversight board" for each of the redevelopment agencies will be formed and operate, with the state controller and the state director of finance overseeing them.



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Capitol Alert Staff


Amy Chance Amy Chance is political editor for The Sacramento Bee. achance@sacbee.com. Twitter: @Amy_Chance

Dan Smith Dan Smith is Capitol bureau chief for The Sacramento Bee. smith@sacbee.com. Twitter: @DanielSnowSmith

Jim Miller Jim Miller covers California policy and politics and edits Capitol Alert. jmiller@sacbee.com. Twitter: @jimmiller2

David Siders David Siders covers the Brown administration. dsiders@sacbee.com. Twitter: @davidsiders

Christopher Cadelago Christopher Cadelago covers California politics and health care. ccadelago@sacbee.com. Twitter: @ccadelago

Laurel Rosenhall Laurel Rosenhall covers the Legislature, the lobbying community and higher education. lrosenhall@sacbee.com. Twitter: @LaurelRosenhall

Jeremy White Jeremy B. White covers the Legislature. jwhite@sacbee.com. Twitter: @capitolalert

Koseff Alexei Koseff edits Capitol Alert's mobile Insider Edition. akoseff@sacbee.com. Twitter: @akoseff

Dan Walters Dan Walters is a columnist for The Sacramento Bee. dwalters@sacbee.com. Twitter: @WaltersBee

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