California's high court kills redevelopment

Justices also kill bill that would have continued redevelopment, an option pursued by Santa Cruz County and local cities

SANTA CRUZ - Redevelopment, the program that lifted downtown Santa Cruz from the rubble of the Loma Prieta earthquake and across 25 years poured millions into Soquel and Live Oak, is over.

The California Supreme Court on Thursday delivered stunning twin blows, preserving a $1.7 billion Sacramento fiscal maneuver and avoiding punching a massive hole in the state's budget. But the court also foreclosed any hope local redevelopment officials had of pressing on, an option - though a pricey one - offered up by state lawmakers.

"It was," Santa Cruz City Manager Martin Bernal said, "the worst-case scenario for us."

That sentiment was echoed throughout California cities and counties, particularly those who hope to use redevelopment funds as originally intended - to scrub the urban core of blight and foster a brighter future for residents.

But redevelopment's legion of critics contend that redevelopment agencies have drifted far from their original mandate, putting taxpayers on the hook for billions of dollars with little oversight and with much of the money lining the pockets of well-connected developers.

"The court's decision was comprehensive, and it's a grand slam for those concerned about fiscal responsibility in California," said Aptos resident Doug Kaplan, a prominent redevelopment critic. "Redevelopment was ended for fiscal reasons, but it was like putting away Al Capone for income taxes. Redevelopment's real offenses were much more serious."

Redevelopment's impacts across the county are widespread. The program helped rebuild Pacific Avenue after the earthquake, turn Salz Tannery into an arts center, built Live Oak's Simpkins Family Swim Center and will build a state-of-the-art Mid-County home for the Santa Cruz County Sheriff's Office.

Redevelopment also built miles of storm sewers and sidewalks in Soquel and Live Oak, and contributed to the soon-to-be-opened National Marine Sanctuary Exploration Center in Santa Cruz. And it has helped house thousands too poor to afford the region's sky-high rents.

"Over 25 years, it managed to do what previous boards of supervisors failed to do, which is fund infrastructure in the most urbanized part of the county," said Supervisor John Leopold, who represents Live Oak and Soquel, areas targeted for redevelopment. "We weren't done, but we can be proud of 25 years of accomplishments. It fundamentally changed the community."

The Supreme Court's 7-0 decision affirms Gov. Jerry Brown's reliance on $1.7 billion in redevelopment funds to balance the state's books, a move resulting from twin bills hastily proposed and passed as the legislature's 2011 budget deliberations reached a crescendo. Brown argued redevelopment was being abused statewide, diverting money from schools, fire departments and more.

"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.

But by striking down a companion bill with a 6-1 vote, the court also disallowed the state's nearly 400 redevelopment agencies, including five in Santa Cruz County, from continuing. After the ruling, the California Redevelopment Association called on state lawmakers to revive redevelopment.

Under that bill, all local redevelopment agencies - the county's, as well as agencies in Santa Cruz, Watsonville, Scotts Valley and Capitola - hoped to continue operating by paying what many derisively referred to as a "ransom" as a condition of continued operation.

Local impacts weren't immediately clear. The county redevelopment agency had already moved to drain its coffers before the state could get its hands on the money, approving $75 million in projects, including the $44 million public safety center. It sought to further shelter those projects by inking deals on most, if not all, of them.

"It was just one of those situations where you hope for the best and prepare for the worst," County Administrator Susan Mauriello said. "We have every expectation that those projects that were encumbered in accordance with the requirements of the law will be able to be completed."

Perhaps more significant, affordable housing in California just lost its main source of funding. The county intended to pay the $8.4 million "ransom," along with an ongoing annual fee, mainly to preserve its affordable housing program.

"That was going to be one of the primary benefits of opting in, would have been affordable housing," said Betsey Lynberg, the county's former redevelopment administrator. "It raises a statewide question of what are we doing to support affordable housing, if not for redevelopment."

Locally, Assemblyman Luis Alejo, D-Salinas, criticized the decision, saying he was "extremely disappointed." Alejo voted against the twin bills that both ended redevelopment and threw agencies a lifeline, AB 26 and AB 27, and suggested the Legislature should take up the issue when it returns in January.

"I look forward to working with my colleagues this year to restore business' trust, renew efforts to spur economic growth, and regain lost ground with this setback," Alejo said.

Should the Legislature decline to rescue redevelopment, oversight bodies will be created for each of the five redevelopment agencies within the county. Eventually, those bodies would merge, but before then each must liquidate their agencies, distributing the assets according to the same formula used to divide property taxes.

Those liquidations could include the agencies' property assets, which can be substantial.

In the ruling, the Supreme Court disagreed with arguments that 2010's Proposition 22, a voter-approved initiative seeking to protect local tax dollars from a state grab, barred the state from ending redevelopment. That ruling left Scotts Valley Councilman Jim Reed flummoxed, since Prop. 22 specifically mentions redevelopment.

"You understand why people think they just don't have a voice in Sacramento," Reed said. "It's crazy."

WHAT IT MEANS

The California Supreme Court handed down a decision Thursday that redevelopment officials most feared, but one that left critics celebrating. Under the ruling, the court upheld a $1.7 billion state funding grab, but also killed a bill allowing redevelopment agencies to continue operations. Barring legislative intervention, redevelopment is over.

By May 1, oversight bodies will be appointed to oversee the liquidation of redevelopment assets, which will then be distributed to local governments, school districts, fire departments and more. One local official called it "the worst-case scenario."

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Source: http://www.santacruzsentinel.com/ci_19639149?source=rss_viewed

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