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.