Preparing for the Proposed Elimination of Redevelopment Agencies

Carl DeMaio Carl DeMaio 4 Comments

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“Whether you support Redevelopment or not, if Gov. Brown does eliminate funding in whole or in part, city leaders must be prepared to protect taxpayers.  Here’s a 3-point memo I have released asking for financial and legal analysis to do just that.”  — Carl DeMaio

Memorandum

Governor Brown’s proposal to eliminate Redevelopment Agencies would have serious consequences for the future of San Diego . While we may object to this plan, it is important for city officials to demonstrate proactive leadership in preparation of Governor Brown’s action and during the transition that would follow. Our singular goal must be to protect the General Fund.

 Therefore, I respectfully request that the Mayor, the City Attorney and the Independent Budget Analyst respond to the City Council and the taxpayers of San Diego regarding three critical questions that will likely result if the State eliminates Redevelopment Agencies. 

 1. Identify and score any impact to the General Fund of any elimination of Redevelopment Agencies as of July 1, 2011.

 2. Identify any legal or financial impacts and options for dissolving the Centre City Development Corporation and the Southeastern Development Corporation.

 3. Ascertain whether any memoranda of understanding, participation agreements, or any other contracts with other government entities or private entities that have obliged or committed redevelopment funds for any projects would remain in place or if there is a risk that those obligations would revert to the General Fund.

 We must address these issues and consider the total impact of Redevelopment Agency elimination while there is still time to take action to protect the General Fund and avoid a further reduction in core service levels.

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Comments 4

  1. Redevelopment agencies are constitutionally projected. As such, neither the legislature nor the governor has the right to eliminate them. To do so would take a vote of the people.

  2. True, with a caveat…

    As part of the budget in FY 08-09 the State of CA was going to end tax increment revenue to redevelopment Agencies. (These revenues were not specifically included in Proposition 1A protections because they are already constitutionally protected, as noted by Alger.) The California Redevelopment Association successfully sued the State, winning a trial court ruling in May 2009 blocking the State budget “intentions” on redevelopment.

    In spite of this, the State has included “takes” from redevelopment funds to help “balance” subsequent budgets, by utilizing creative legal language in an effort to get around the trial court ruling that blocked the FY 08-09 attempt.

    In other words, redevelopment is protected constitutionally, but the State, and now Jerry Brown specifically, believe they have a legal work around on the protections.

    The State balanced a portion of last year’s budget by temporarily borrowing local tax revenue under Proposition 1A, by declaration of a fiscal emergency. Yet, as that by itself requires repayments after three years, an end to redevelopment and/or a “shift” of revenue to the state will not address ongoing structural deficits without looking for additional dollars.

    This is not an argument for or against redevelopment. Just to point out that CA is always in the market for any means possible to ignore its structural budget problems. The easy targets are all too often business and local government, the second of which derives its revenue from business, just like the State does.

    So, let’s go after them both. Good economic solution.

  3. Barry,

    How does Prop 22 affect the State’s ability to do an end-run around the constituitional protections?

  4. Great question; I don’t immediately know the answer. I believe that Prop 22 in essence took the protections previously found statutorily in Prop 1A and made them constitutional, while including additional protections for local government. But, that new constitutional protection for a city’s general revenue is separate from the protection that was already in place in the state constitution for redevelopment funds. So, it could be whatever “end-run” interpretation is being utilized by the state for redevelopment funding was not addressed/fixed with the passage of Prop 22. Does anyone know? My fake lawyer-ese stops here.

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