Today ostensibly marks the end of redevelopment in California, when no new projects may begin and no new agreements may be forged. But that's how it's been for nearly a year, ever since Gov. Jerry Brown announced his intent to do away with redevelopment and made repeated assurances that the state would not allow agencies to shield assets or rush into agreements before his proposed deadline. Since then, agencies have been quivering, hoping for a reprieve but doing very little by way of redevelopment.
By turning themselves over to successor agencies today, redevelopment agencies essentially become accounting firms: poring over their books, figuring out their assets and liabilities, and submitting to the approval of oversight boards -- one seven-member committee for every defunct RDA -- to ensure that funds are disbursed to either the state or to legitimate creditors.
"It's a new tack on February 1," said Jean Hurst, lobbyist with the California State Association of Counties. "Instead of planning for projects and executing projects, it's going to be more, ‘Let's figure out where we are financially. Let's figure out what our debts and contracts are.'"
Redevelopment agencies are, therefore, not going to disappear overnight.
"I think the keys will still work and the computers will turn on," said Hurst.
Though the transformation will take place largely on paper, is not expected to be easy.
Assembly Bill X1 26 enumerates the roles and obligations of successor agencies, oversight boards, and other entities involved with the dissolution of RDAs. Since Dec. 27, a host of entities has been rushing to interpret the regulations outlined in AB X1 26 and turn them into actionable items. The state Department of Finance, State Controller, CSAC, and California Redevelopment Association have all published interpretations of what AB X1 26 means for successor agencies as of Feb. 1. Those discussions have, many say, been fruitful.
"I think it's fair to say that we were a little caught off-guard by the case and by the timeframe that we had to figure out what our role is," said Jean Hurst, lobbyist for CSAC. Counties are, in many ways, on the front lines of the dissolution. It is up to each county assessor-controller to scrutinize redevelopment agencies' books and help determine how to allocate their former tax increment funds.
"The hardest part of this whole thing is going to be the flow of revenues from the counties to the successor agencies to make sure we get that right," said Marty Coren, a consultant who is chairing one of the CRA's technical advisory committees. "There's a lot of ambiguity so we're trying to figure out common-sense approaches to make it work."
Coren said that determining the dissolution process has required an uncommon amount of collaboration among state and local entities. The goal, he said, has been to come to a common understanding of what the law requires so that once it goes into effect all parties at least have a baseline set of principles from which to operate.
"We had some areas of disagreements," said Coren. "It's not either side is right or wrong, but there are different ways to interpret things."
Coren said that one of the most puzzling questions from AB X1 26 concerns the definition of a "special district" for the purposes of forming oversight committees. The law does not indicate whether it refers to special districts that are dependent on or independent of other jurisdictions.
By May 1, oversight committees are to be formed to govern the successor agencies. The legislation dictates that each oversight committee consists of seven members. Those seven members are appointed by: the mayor of the local jurisdiction, the county board of supervisors (two members, one of whom must be a member of the public), the largest special district with an interest in the RDA area, county supervisor or board of education, the chancellor of the California Community Colleges, and a member of the RDA's former association of employees.
Despite the specificity of the recipe for constituting an oversight committee -- and of the centrality of oversight committees to the dissolution process and the accurate disbursement of funds -- AB X1 26 does not actually indicate how they are to be formed.
Successor agencies may thus have to lobby for the formation of their own oversight committees.
"There's no guidance in the legislation," said Coren. "But what we're telling our clients is that as a successor agency go ahead and contact the county and school board and call a meeting and that will get it started."
Some are anxious that oversight committees will have the expertise needed to parse the finances of redevelopment agencies, with operate differently from almost all other public entities.
"Up until now RDA's were responsible for tax-sharing agreements…a lot of counties did not get involved with that," said Coren. "Now, overnight committees are going to have responsibility for 100 or more tax-sharing agreements and they're not set up to do that."
Hurst noted, though, that county assessor-controllers have experience from their involvement with the ERAF payments of previous years. They will, however, now have a massive addition to their workload.
"Los Angeles County has 71 redevelopment agencies, so it's going to be an issue," said Hurst. "We don't have the ability to decline the responsibility, so we have to make it work."
Brent Hawkins, an attorney who has represented the League of California Cities on redevelopment matters, is similarly pessimistic about Los Angeles County's ability to handle the workload.
"The task of inventorying all of those agencies and getting it done by sometime this summer, while taking care of everything else they're supposed to be taking care of—I don't know how they're going to do it," said Hawkins.
Hawkins added that he was also concerned that county staff in rural counties with few RDAs may not have the requisite experience. He said that the state was unlikely to provide meaningful assistance because "The state doesn't have any expertise; redevelopment is a local program."
Making it work, according to Coren, entails a tremendous amount of collaboration, even though different entities may have different feelings about the demise of redevelopment. Cities have deplored it, while counties, which may reap more in property taxes, have not been so opposed.
"The best thing we can have going forward is to work cooperatively with the counties and the other taxing entities," said Coren. "There's a loss of a sense of entitlement by some of the cities. We've got to overcome that and make the best of what's being presented."
Others are not so optimistic.
"I think this is going to be a slow-motion train wreck," said Hawkins. "Some people think the sun isn't going to rise tomorrow. I don't think that's going to be the case."