Supreme Court Rules on Challenges To the State's Plan to Dissolve Redevelopment Agencies

(From http://www.courts.ca.gov/16345.htm)

Court Decides the State Has the Authority to Dissolve Redevelopment Agencies but Does Not Have the Authority to Condition Their Continued Existence on Required Payments

San Francisco — Resolving challenges filed by the California Redevelopment Association, the League of California Cities, and the cities of San Jose and Union City, the California Supreme Court today upheld the constitutionality of Assembly Bill 1X 26, which dissolves redevelopment agencies and redirects their property tax revenues, and struck down Assembly Bill 1X 27, which would have allowed redevelopment agencies to continue to operate, but only if they opted in on a plan that required annual payments.

On July 18, the California Redevelopment Association and the League of California Cities filed a petition asking the court to overturn both Assembly Bill 1X 26 and Assembly Bill 1X 27.  On August 11, the court agreed to hear the lawsuit and issued a partial stay of various provisions of both bills and to issue a decision before January 15, 2012.  The court expedited briefing and argument on the matter and held oral argument on November 10.

In a majority opinion authored by Associate Justice Kathryn M. Werdegar, the court upheld the enactment of Assembly Bill 1X 26, dissolving redevelopment agencies and redirecting their property tax revenues.  The court explained that, because the Legislature had the authority to create redevelopment agencies, it also had the corollary power to dissolve them.  The court noted that although Proposition 22, as enacted by the voters in 2010, amended the state Constitution to impose additional limits on the state's fiscal powers, nothing in that initiative or other parts of the state Constitution guaranteed the continued existence of redevelopment agencies.

The majority, however, held that Assembly Bill 1X 27 was unconstitutional because it conditioned the ability of redevelopment agencies to conduct new business on agreeing to an annual payment plan based on a portion of property tax revenues allocated to redevelopment agencies.  The court explained that this opt-in plan violated Proposition 22 because that measure arose in opposition to similar past legislation and was intended to preclude further required payments based on redevelopment agency property tax revenues.

The majority opinion by Justice Werdegar was signed by Associate Justices Joyce L. Kennard, Marvin R. Baxter, Ming W. Chin, Carol A. Corrigan, and Goodwin Liu.

Chief Justice Tani Cantil-Sakauye joined the majority opinion upholding Assembly Bill 1X 26, but dissented with respect to the conclusion that Assembly Bill AB 1X 27 was unconstitutional.

The Chief Justice observed that neither Proposition 22's history nor its express language appeared to prohibit the opt-in payment plan created by Assembly Bill 1X 27.  The dissenting opinion noted that it appeared the Legislature had carefully drafted Assembly Bill 1X 27 so as not to violate Proposition 22 by allowing the annual payment to come from any local revenue source and not specifically redevelopment agency funds, which Proposition 22 expressly protects.  The Chief Justice concluded that Assembly Bill 1X 27 does not facially conflict with the state Constitution and further noted that the parties presented no evidence that the measure would actually violate the state constitution in practice.

The court unanimously reformed Assembly Bill 1X 26, which had been largely stayed during the pendency of this action, by extending its various deadlines by four months.

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To read all of AB 1X 26, click HERE or go to http://leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/abx1_26_bill_20110629_chaptered.html.

To read all of AB 1X 27, click HERE or go to http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/abx1_27_bill_20110629_chaptered.html.

Another county sues municipality over redevelopment merger

The Ventura County Star is reporting a familiar story being played out throughout California.  Redevelopment agencies have been attempting to merge their zones or areas into a single massive redevelopment area.

According to the Ventura County Star, Simi Valley merged three redevelopment areas into one last June.  Ventura County objected and has sued.  The County claims the area is not blighted.

Sound familiar?  It should!  Fullerton has done the same thing with their massive merger of redevelopment areas. 

The Fullerton Redevelopment Agency merged areas in 2009 and was sued by the County of Orange as well as a local resident and businessman.  Fullerton ended up paying millions for their greed to the County in property tax revenue that the County was going lose.  Over the next 45 years, the City could pay out as much as $500-million. 

Many of these legal battles may not be fought in the courtroom at all.  The California Supreme Court has been asked by the State's 425 redevelopment agencies to overturn the state legislation passed earlier this year which abolishes all redevelopment agencies unless they pay a "fee" to cover some of the lost revenue. 

It's somewhat satisfying to watch agencies fight one another over taxes.  The Cities, through their redevelopment agencies are like little Tea Parties trying to pay as little in taxes as possible.  It's really quite funny until you realize its all OUR money.  The City, County, and State took my money, squandered most of it on "overhead", and then gave what was left to another agency...

Special thanks to Redevelopment.us for bringing this story to my attention.

For more on Fullerton's Redevelopment Agency, CLICK HERE.

Stockton's Redevelopment Failure Gives Fullerton a Dismal Outlook

A Bloomberg Businessweek article on Stockton (CA) Redevelopment's possible default should have many of Fullerton's Redevelopment Agency supporters biting their nails. 

Stockton declared a fiscal emergency in May and is now warning that the RDA may default on a 2006 bond obligation with the debt service outpacing revenue to the tune of $858,000. 

Fullerton has several outstanding redevelopment bond obligations.  In July 2010 the Fullerton RDA announced spending $22.7-million for low-income housing and then in October 2010 the RDA passed a $29-million bond which is expected to cost taxpayers $45.5-million of the following 16 years.

Putting these figures in perspective, the Fullerton RDA receives about $17-million per year to cover all of the agency's debts and project development.

And we cannot forget yet another expense incurred by Fullerton's RDA, something I call the "Brown Taxes" after our own Governor Brown.  Sacramento's ABX1-26 & 27 is aimed at recovering tax revenue from redevelopment agencies, Fullerton's RDA paid out $6.26-million in Brown Taxes.

This is the same redevelopment agency which planned to spend $6-million to move a McDonald's 200 feet! 

With several bond obligations, Brown Taxes, slumping property tax increment revenue, poor direction, and pending litigation, the Fullerton Redevelopment Agency would be doing us all a favor if they just closed their doors for good.

Is Redevelopment About to Expand?

It sure looks that way. 

Among the Agenda items for Tuesday night's City Council meeting is Item #18, a MOU between the Cities of Fullerton, Buean Park, La Habra, Brea, Placentia, Yorba Linda, County of Orange, and the Orange County Workforce Investment Board is paving the way for a North Orange County Economic Development Partnership. 

That's a mouth full.

It looks like maybe this new agency could dodge some of Sacramento's pay-to-play redevelopment taxes recently enacted.

It also creates a much larger muscle for the redevelopment community to flex.  As it stands, three council members could end the Fullerton Redevelopment agency with a simple vote.  This new agency would be nearly impossible to dismantle once in place.

There is a bunch of fluff and superfluous wording that sells conservatives on a regional investment strategy.  And with Dick Jones, Don Bankhead, and Pat McKinley on the council, you can rest assured the MOU will pass.

Congressman Tom McClintock Calls for End to Redevelopment Agencies

(from www.StopTheMoneyPit.com)

Joining a chorus of organizations representing private property rights, taxpayers and faith based organizations, conservative stalwart Congressman Tom McClintock is calling for an end to California's 425 redevelopment agencies. In a YouTube video, the Congressman calls out RDAs for abusing private property rights and wasteful government spending, including $6.9 million for a mermaid bar.  He points out that local taxpayer dollars that would otherwise go to local police and fire protection are going into the pockets of politically connected interests. 

Click Here to Watch!

  

In recent weeks, conservative leaders and organizations have been calling on Republican legislators to abandon their support for RDAs. In March of this year, Governor Brown's effort to abolish RDAs failed due to Republican opposition, despite independent analysis that concluded that there is no reliable evidence that redevelopment creates net new jobs.

A website, www.StopTheMoneyPit.com, was launched to build public support for SB 77 and AB 101, legislation that abolishes RDAs.

Congressman McClintock urges you to contact your state legislator!  Click here to find out who represents you in the California State Legislature.

Family Action PAC Takes On Redevelopment

Family Action PAC Urges Orange County GOP Legislators to Abandon Defense of Redevelopment Agencies

Political organization calls support for RDAs an affront to conservative principles

For Immediate Release                                                                                

Orange County, CA (June, 2011) – Today, the California Alliance to Protect Private Property Rights announced that a prominent conservative Orange County political action committee has joined a coalition of taxpayer and private property rights organizations in calling for the abolition of California redevelopment agencies (RDA).

RDAs have come under considerable public scrutiny for wasteful government spending, eminent domain abuse and, according to independent state analysis, failing to increase the overall number of California jobs. In March, only one Republican legislator, Orange County Assemblyman Chris Norby, joined Democrats in supporting Governor Jerry Brown’s plan to abolish redevelopment agencies. Failing to generate one more Republican vote, taxpayer funding of RDAs continue.

Several Orange County Republican legislators that have been critical of redevelopment agencies in the past, now defend their very existence.

“GOP support for redevelopment agencies is an affront to conservative values,” said Family Action PAC chairman Larry Smith.  “During these tough economic times, providing taxpayer funding for private development, sports arenas and luxury golf courses is not a good use of taxpayer dollars.  It has hard to believe that Republicans are standing in the way of reform.”

In addition to diverting over $5 billion in tax increment revenue annually without any reliable evidence that they create new jobs, a California’s State Controller audit of RDAs concluded that overly broad definitions of “blight” expose private property to eminent domain abuse and invite wasteful spending of tax dollars on dubious redevelopment projects such as luxury golf courses.  In addition, redevelopment funds were inappropriately used to supplement the general funds of local governments.

The Family Action PAC was formed in 2000 to focus on business, family, and social issues.  The PAC supports initiatives and local and state candidates that will affect Orange County and California, and has served a critical role in the outcome of Republican primaries in Orange County.

The California Alliance to Protect Private Property Rights recently launched a statewide public educationcampaign to build public opposition to RDAs and ask GOP legislators to sign a pledge to abolish redevelopment agencies. The pledge calls on GOP legislators to renew their commitment to conservative values such as protecting taxpayers and private property.

Californians are encouraged to visit www.stopthemoneypit.com to learn how they can join our campaign to protect private property rights, eliminate government waste, and support legislation that abolishes RDAs, SB 77 and AB 101.

The California Alliance to Protect Private Property Rights is California’s leading private property rights (non-partisan) organization founded in 2005 and was a lead sponsor of Proposition 98, a 2008 state ballot measure that sought to protect private property rights.

Contacts:

Marko Mlikotin, California Alliance to Protect Private Property Rights, 916.552.0335

Larry Smith, Chairman, Family Action PAC, 949.955.1191

www.calpropertyrights.com

OC Register Editorial: Don't blow chance to scuttle redevelopment agencies

(As the debate over dismantling California's powerful and wealthy redevelopment agencies winds down to background noise behind Japan and Libya, the OC Register's editorial staff would like to remind us that redevelopment agencies are still a very real problem.  Here is a portion of yesterday's editorial.)

The vote on Gov. Jerry Brown's plan to end redevelopment agencies was still open Tuesday, so there was still some hope that these noxious local fiefdoms can be shut down, but so far Republican Assembly members had been a major disappointment on the issue. The bill was one-vote shy of the two-thirds majority needed for passage and only Republican, Chris Norby of Fullerton, had voted "aye."

Redevelopment is the epitome of big government at the local level. There are about 400 active agencies statewide, and they routinely abuse eminent domain, run up debt without a public vote and micromanage land-use decisions in cities. Redevelopment agencies were formed in the 1940s to combat blighted urban cores, but they now function mainly to entice developers to build sales-tax-generating big-box stores and auto malls. It's corporate welfare mated with government abuses of power.

Read the rest of the editorial HERE.

Watchdog Bites Republican Fat

Cal Watchdog's Steven Greenhut sinks his teeth into the GOP fat after they voted to keep big government BIG.

California Republicans love to talk about limiting government, fighting bureaucracy and keeping taxes low, but on Thursday they proved that this is nothing more than a rhetorical device. Given the opportunity to rein in the size and power of government in a tangible way, Assembly Republicans – with one sole exception – punted. They rallied to save some of the most abusive and wastrel government agencies around.

Read Greenhut's full story HERE at Cal Watchdog.

City to Bleed $14.1 Million from Redevelopment Agency As Governor's Proposed Budget Looms

An urgent meeting is scheduled for this afternoon at City Hall.  While most meetings are scheduled for 6PM or later, this one is set for 4PM, forcing many to leave work early in order to speak at the meeting.

The urgency of the council/Redevelopment Agency meeting comes after Governor Brown announced his intentions of squashing Redevelopment Agencies as component of saving money and redistributing funds to their normally allocated destinations. 

This afternoon’s Agenda has only one item (MISSING WORD ADDED BY ME):

CONSIDER APPROVING A COOPERATION AGREEMENT BETWEEN THE CITY OF FULLERTON AND THE FULLERTON REDEVELOPMENT AGENCY FOR (PARTIAL) FUNDING OF CAPITAL IMPROVEMENT PROJECTS, GRAFFITI REMOVAL SERVICES, AND PROFESSIONAL SERVICES

In a nut shell, City Hall sees their glass house shattering and is looking to pull out as much money as possible from the Redevelopment Agency in order to install street lights in the Lemon/Truslow area, stabilize the slopes along Harbor Boulevard just below the YMCA, improve Hillcrest Park, and build a parking garage at the Fullerton Transportation Center. 

In all, the City/Redevelopment Agency is looking to move $14,100,000 from the Redevelopment agency coffers to the City of Fullerton coffers to help cover some of the upfront costs associated with these projects.

If any of those mentioned sound familiar it’s because just last Tuesday the City Council decided to ask Congress for some money to address them.

This sounds like the scheme of someone who desperately pulls out every bit of equity from their house ($14.1M from RDA’s tax increment), maxes out all of their credit cards ($29M in tax bonds) for that new sports car (town homes and condos and garages) knowing they are about to get slapped by a court-ordered judgment (governor’s proposed budget) that will surely leave them penniless.

Once again, the lack of leadership has manifested itself by the procrastination of City Hall to tackle our crumbling infrastructure.  Water-mains continue to erupt forth from our streets like Old Faithful while the ever-expanding potholes begin to resemble the Grand Canyon.  At this rate, residents will be able to sell tickets to the spectacle as our city sinks into the abyss of municipal doom.

Also in the news, the California State Controller’s Office Announced that they have selected the Placentia Redevelopment Agency among 18 agencies to be reviewed by the Controller’s Office.

“The heated debate over whether RDAs are the engines of local economic and job growth or are simply scams providing windfalls to political cronies at the expense of public services has largely been based on anecdotal evidence,” Chiang said. “As lawmakers deliberate the Governor’s proposal to close RDAs and divert those funds to local schools and public safety agencies, I believe it is important to provide factual, empirical information about how these agencies perform and what they bring to the communities they serve.”

Read more about the review at http://gregsebourn.blogspot.com/2011/01/controller-launches-review-of.html

Controller Launches Review of Redevelopment Agencies

Controller Launches Review of Redevelopment Agencies

PR11:03
1/24/2011

Contact: Jacob Roper
916-445-2636

SACRAMENTO – State Controller John Chiang today announced his auditors were beginning reviews of 18 redevelopment agencies (RDA) across the state in an effort to obtain facts on how RDA funds are used and the extent to which they comply with laws governing their activities.
“The heated debate over whether RDAs are the engines of local economic and job growth or are simply scams providing windfalls to political cronies at the expense of public services has largely been based on anecdotal evidence,” Chiang said. “As lawmakers deliberate the Governor’s proposal to close RDAs and divert those funds to local schools and public safety agencies, I believe it is important to provide factual, empirical information about how these agencies perform and what they bring to the communities they serve.”
The 18 RDAs selected for the reviews represent urban, suburban and rural communities. They are geographically diverse and represent a mix of varying populations. The reviews will look at, among other things, how the RDAs define a “blighted” area, whether they are appropriately paying for low- and moderate-income housing as required by law, whether they are accurately “passing through” payments to schools within their community, and how much RDA officials, board members and employees are being compensated for their services.
To assist lawmakers in their budget debates, the reviews will be completed in early March. The chosen RDAs are as follows:

·       Redevelopment Agency of the City of San Jose (Santa Clara County)

·       Redevelopment Agency for the County of Riverside

·       Community Redevelopment Agency of the City of Los Angeles (Los Angeles County)

·       Richmond Redevelopment Agency (Contra Costa County)

·       Redevelopment Agency of the County of Sacramento

·       Redevelopment Agency of the City of Pittsburg (Contra Costa County)

·       Redevelopment Agency of the City of Fremont (Alameda County)

·       Pasadena Community Development Commission (Los Angeles County)

·       Redevelopment Agency of the City of Fresno (Fresno County)

·       City of Palm Desert Redevelopment Agency (Riverside County)

·       Placentia Redevelopment Agency (Orange County)

·       Parlier Redevelopment Agency (Fresno County)

·       Hercules Redevelopment Agency (Contra Costa County)

·       Anderson Redevelopment Agency (Shasta County)

·       Community Redevelopment Agency of the City of Citrus Heights (Sacramento County)

·       Community Redevelopment Agency of the City of Calexico (Imperial County)

·       Community Development Agency of the City of Coronado (San Diego County)

·       City of Desert Hot Springs Redevelopment Agency (Riverside County)

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The California Redevelopment Association

Did you know that the City of Fullerton (acting as the Fullerton Redevelopment Agency) pays $8,400 per year to be an agency member of the California Redevelopment Association?  I bet you didn't know there was such an entity, much less that your tax dollars were being funneled to it. 

It seems everyone wants to skim a little bit of Fullerton's cream for their own baby.  This association isn't much different than our own Fullerton Redevelopment agency.

The association skims $8,400 each year so that agency staff can receive more misguided recommendations to pass along to the Agency's board members who are also our city council members- one and the same, while our Fullerton Redevelopment Agency skims $16,639,720 in property tax revenue (the tax-increment) that was intended for education, public safety, and the infrastructure. 

Population segment of dues: 100,001-200,000, $1,160 (actual population from Ca. Dept. of Finance 2009, 137,624)

Tax-increment segment of dues: 14,000,001-18,000,000, $7,240 (actual tax-increment as reflected in the FY 2010-2011 Amended Budget, $16,639,720) http://www.calredevelop.org/external/wcpages/wcwebcontent/webcontentpage.aspx?contentid=228