Update: State Supreme Court: No More Redevelopment Agencies

The California Supreme Court on Thursday upheld a ruling that eliminates redevelopment agencies, an outcome city officials had hoped against.

Updated 11:17 a.m. Thursday with statements from Gov. Jerry Brown and San Diego City Councilman Carl DeMaio. Updated 11:25 a.m. Thursday with statement from Mayor Jerry Sanders.

The California Supreme Court on Thursday upheld a new law that will abolish community redevelopment agencies, dealing a blow to San Diego city officials who tried to keep their agency open. (Ruling attached.)

The state's high court also struck down a companion statute that allowed local governments to keep the agencies alive by making payments to the state.

Redevelopment proponents argued that voter-passed Proposition 22, which bars the state from seizing local tax money, invalidated both laws. Redevelopment agencies are funded by the increase in tax revenue created by projects in their areas.

Supporters of the laws passed by the Legislature earlier this year, including Gov. Jerry Brown, say the money is better used to fund schools and other municipal functions during tight budgetary times. They cite a state analysts report that shows the cost of redevelopment growing without any tangible economic benefit to the state.

"Today’s 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," Brown said in a statement.

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

"Today’s ruling by the California Supreme Court was the worst possible outcome—as it completely eliminates redevelopment agencies and undermines our ability to invest in economically distressed neighborhoods," San Diego City Councilman Carl DeMaio said in a statement. "This decision will allow Sacramento to ransack important local funds in order to temporarily patch the massive budget deficit at the state."

DeMaio, who is now calling for Mayor Jerry Sanders and the City Council to hold a special meeting, said the ruling could cost the city's general fund more than $15 million a year.

Sanders also issued a statement in the wake of the ruling, saying,

"This is a sad day for San Diego. Plain and simple, this money grab by the governor will have severe negative impacts on our neighborhoods and our economy for decades to come. Redevelopment has been an incredibly effective tool for eliminating blight, increasing the affordable housing supply and creating jobs. We’re not going to stand by idly and let the progress our communities are making simply die off; we’ll begin working immediately with our state legislators to pass new laws giving us tools enabling reinvestment in our lower-income communities."

The agencies not only fund major building projects, like proposed new football stadiums in downtown San Diego and Los Angeles, but spend 20 percent of their income on affordable housing.

San Diego Housing Federation Executive Director Susan Tinsky called for a new affordable housing funding source.

"In the current economic environment, more people are doubling up, living on someone else's couch, or worse yet, sleeping in their cars or on the street each day," Tinsky said. "We call on public officials and policymakers at all levels to join in developing and executing a plan to deal with the state's housing crisis now."

On Wednesday, DeMaio said he would work with other officials across the state to pass a ballot measure to "absolutely guarantee that redevelopment dollars remain local."

Councilwoman Sherri Lightner said, "there are still many questions that need to be answered. But one thing is clear: we all need to work together to find new and effective ways to help our neighborhoods and improve our local economy."

The city of San Diego and many other local jurisdictions chose to pay the state to keep their agencies open. San Diego was due to pay $70 million.

San Diego officials point to downtown as an example of the success of redevelopment.

-City News Service and Rancho Bernardo Patch Editor Shauntel Lowe contributed to this report.

Chris Cruse December 30, 2011 at 10:24 PM
Thanks for the clarification, Shauntel. DeMaio is wrong that redevelopment money can be transferred to a city's general fund. In fact, redevelopment money diverted property tax dollars from flowing into city and county general funds. When the massive debt of these redevelopment agencies is finally paid off, our property taxes will once again flow into school, city and county general funds and be used for core services instead of building ballparks, shopping malls and car dealerships. I wish him the best of luck trying to get redevelopment reinstated by ballot. But it is surprising to see who supports massive deficit financing like redevelopment, isn't it?
Tonto December 31, 2011 at 01:58 AM
Every dime has been robbed from the taxpayers in the first place. Refund the billions to the taxpayers now!
Nick Stavros December 31, 2011 at 02:25 AM
The redevelopment agencies and the cities are like spoined children that need to be taken out to the wood shed. No one has stolen money from them, they were allowed grants from the property taxes that should have gone to other government agencies. When the state finally decided that the grants would end, just like ungrateful, spoiled children ... they hoot and holler and complained that "it isn't fair". Now they will actually have to ask how the money will be spent.
Barbara D January 01, 2012 at 11:10 PM
Here is an article about redevelopment that will educate those who don't know what it entails. http://www.redevelopment.us/wp-content/uploads/2011/01/RUG-2006-final.pdf
Nick Stavros January 02, 2012 at 12:00 AM
Absolutely brilliant article. Now that Redevelopment is dead, I guess Don Higginson won't want to run for Council anymore. He won't have millions of dollars to give away to his friends in legal graft!


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