For many cities that have endured the painful process of dissolving their redevelopment agencies, the bloodletting has begun anew.
San Bernardino County is not entitled to the return of $9 million in loan principal to the former county redevelopment agency, even though the funds were not tax-increment revenues and had come from the county’s general fund, the Third District Court of Appeal ruled Monday.
The appellate court concluded that once the funds had been transferred from the county to the redevelopment agency, they were subject to a state law voiding all agreements between local governments and their redevelopment agencies. The source of the funds is irrelevant, the court said.
In reaching this conclusion, the court saw no difference between a government agency spending tax money on items such as office supplies and a government agency loaning funds to another government agency. “[M]oney loaned by the county, even if the County obtained those funds as an allocation of taxes, does notretain its character as tax revenue in the hands of the borrower,” wrote Justice George Nicholson, a onetime Republican candidate for attorney general and aide to Gov. George Deukmejian, for a unanimous three-judge panel.
So, redevelopment is back, sort of. How much of a difference it will make remains to be seen.
Gov. Jerry Brown has signed AB 2 (Alejo), which permits cities to create tax-increment-based “Community Redevelopment Investment Authorities” (CRIA). It’s more or less the same bill that legislative leaders – led by former Senate pro tem Darrell Steinberg – have been trying to get Brown to sign since 2012, when the redevelopment agencies were shut down.
Unlike those earlier bills, however, this law makes the overt point of completely disconnecting the new system from the old redevelopment code sections in state law; and it makes no connection to SB 375 and the state’s other sustainability-based planning and development efforts.
The Third District Court of Appeal has rejected several arguments that the laws eliminating redevelopment violate the California constitution.
In a followup to California Redevelopment Association v. Matosantos, 53 Cal. 4th 231 (2011), the California Supreme Court ruling that permitted the elimination of redevelopment agencies, the Third District has ruled that AB 1x 26 -- the law that killed redevelopment -- does not violate 2004’s Proposition 1A. The court also rejected a series of other arguments, including the idea that Gov. Jerry Brown’s declaration of a fiscal emergency did not warrant the elimination of redevelopment.
The opinion was written by Justice Harry Hull, who was chairman of the board of McDonough Holland & Allen, a leading redevelopment law firm, before he was appointed to the bench. The language of the blunt-spoken opinion seems to suggest that the cities had a weak case all the way around.
When the redevelopment system was dismantled in 2012, redevelopment leaders around the state feared that the state Department of Finance’s desire for short-term cash would force a fire-sale of redevelopment assets that would drive prices down and undermine cities’ ability to complete their pending redevelopment projects.
More than three years later, the opposite has occurred: Successor agencies are moving slowly to put real estate on the market, in part because both successor agencies and DOF are just now getting around to dealing with Long-Range Property Management Plans or LRPMPs – the plans that delineate just exactly how properties owned by former redevelopment agencies will be disposed of. LRPMPs are required under AB 1484 of 2012, the post-redevelopment cleanup bill that sought to moderate the fire-sale fears, among other things.
In part, the slow disposition is the result of a dauntingly technical process. In the words of Tara Matthews, a partner with the Rosenow Spevacek Group, Inc. (RSG): "The disposition process is confusing, cities are short-staffed, the typical brokerage companies don't understand the process and are hesitant to take it on, and developers don't know what options are available or how to initiate the conservation with cities." Property sales must be approved both by the successor agency’s oversight board and by DOF.
Just when cities thought it was safe to sign on to notices of completion and put their long redevelopment nightmares behind them, a newly proposed bill yet again has put cities at odds with the state.
In the four years since Gov. Jerry Brown ordered the dissolution of the state’s nearly 400 redevelopment agencies, a series of laws and court cases –principally revolving around the 2012 law AB 1484 has resulted in a complex but, for the most part, manageable system by which cities dispose of properties and settle their accounts with the state Department of Finance (DOF). This has meant that DOF takes possession of properties and funds formerly held by redevelopment agencies while DOF reimburses cities for debts owed to them by their former redevelopment agencies and/or pays cities for certain expenses incurred in the dissolution process.
DOF and cities must agree to Findings of Completion before properties may be disposed of and cities receive their reimbursements. To avoid endless bickering over who is owed what, FOC's provide cities and DOF incentive to arrive at negotiated agreements so that cities can receive their rightful reimbursements in a timely manner.
CP&DR News Briefs, May 18, 2015: L.A. Mobility Plan; Delta Smelt Face Extinction; Solar Power Plan PostponedBy Matthew Hose on 18 May 2015 - 10:45am
The Los Angeles Planning Commission advised the City Council to adopt the city's proposed Mobility Plan 2035 (pdf), update the land use element of 35 community plans, and adopt an ordinance to implement new street standards and complete street principles.
Back in 2010, when I was Mayor of Ventura, the city installed parking meters downtown for the first time in 40 years. Not for every parking space, of course. The meters covered only 300 or so prime spaces on Main Street and a few popular side streets. Thousands of other downtown spaces – both onstreet and off – remained free.
The problem we were trying to solve was a pretty typical one: Demand was so high for the prime spaces that people were cruising up and down Main Street, causing a constant traffic jam, in search of a space. The spaces themselves were hogged by merchants and their employees. It was hard to enforce the existing two-hour time limit, and the parkers gamed the system with such familiar tricks as wiping the meter maids’ chalk of their tires. Meanwhile, a half-block away, parking lots and a parking garage sat empty.
The Third District Court of Appeal has ruled that two “re-entry agreements” between Sonoma County and its former redevelopment agency are valid under the redevelopment wind-down law. The case marks the second time this year that the Third District has upheld re-entry agreements, suggesting that local governments are beginning to get the upper hand against the state Department of Finance in post-redevelopment litigation.
The case involves the county’s desire to retain $14 million in tax-increment funds for two projects: street and sidewalk upgrades on Highway 12 north of Sonoma, and a mixed-use project on the site of an abandoned shopping center in the Roseland neighborhood of Santa Rosa.
As with the other recent case from Emeryville, the case turned in part on whether AB 1484, a 2012 law which eliminated re-entry agreements, should somehow be used to invalidate reentry agreements made before the law took effect. In addition, DOF made a series of narrow legal arguments that the Third District did not buy.
In an important victory for local governments, the Third District Court of Appeal has ruled that the state Department of Finance improperly rejected Emeryville’s action to re-enter into several redevelopment agreements with its successor agency.
The case is perhaps the first big win in the post-redevelopment era for local governments, which have battled DOF daily since the elimination of redevelopment three years ago.