State Court Axes Redevelopment

In a move that delivered a double pounding to cities, the California Supreme Court affirmed lawmakers’ right to eliminate local Redevelopment Agencies – and ruled out a pared-down “pay to play” model.

At issue are two laws passed in July to help to close the state's $25 million budget gap. One dissolved the state’s 390 local Redevelopment Agencies, and the other gave cities an option to hold onto theirs by making annual payments.

The League of California Cities and the California Redevelopment Association sued to block the state's action, and the state Supreme Court in effect suspended Redevelopment Agencies until it could issue a ruling.

Today's action allows the state to seize $1.7 billion in property tax revenue, which the law’s supporters say can now go to schools and public safety. Through the mechanism of the “pay-to-play” alternative, Redevelopment Agencies were to pay a combined $1.7 billion for the first year, and $400 million each subsequent year.

That shook out to an opt-in payment of $1.8 million for El Cerrito and a continued yearly contribution of at least $500,000.

Justice Kathryn Werdegar wrote that the Legislature had the power to terminate the agencies, but did not have the authority to require mandatory payments as a condition of future existence. The panel said the second measure violated a 2010 voter initiative that barred the state from diverting property tax revenues from redevelopment agencies.

“It’s very disappointing,” said El Cerrito Mayor Bill Jones, who save his most severe condemnation not for the court but the state legislature, “which has thrown economic development big and small right under the bus.

“The interesting thing is that at the state and federal level they talk about jobs, jobs, jobs,” he said. “Redevelopment agencies were a way of improving cities, but also statewide provided a lot of jobs.” The projects also provided a magnetic core of funding that pulled developers to regions and communities which otherwise would not interest them, he said.

The rulings will not derail the city’s current projects, which include a senior housing residence next to City Hall and special needs housing next to a former Safeway store, he said.

The ruling may also force Redevelopment Agencies to sell their assets, which in El Cerrito, are not plentiful but include the iconic Cerrito Theater.

“That might still happen, and that would be bad,” said David Weinstein, who heads the Friends of the Cerrito Theater, a group dedicated to protecting the theater and its historical elements. “When this first came up there was some talk of maybe the city transferring ownership from the Redevelopment Agency to the city … to a successor agency.”