State lawmakers are likely to consider numerous bills that could restrict redevelopment authority, require greater state oversight, limit use of eminent domain, ease redevelopment opponents’ access to court and impose other requirements on redevelopment agencies.
Thirteen lawmakers from five different committees attended a mid-November joint interim hearing on redevelopment in Sacramento. Senate Local Government Committee Chairwoman Christine Kehoe (D-San Diego), who chaired the hearing, said she expects to see at least six redevelopment bills in 2006. That estimate could be low.
The activity in Sacramento is occurring while Congress considers a bill that would withhold economic development funding from states that permit the taking of private property for economic development purposes — a potential poison pill for redevelopment agencies.
The U.S. Supreme Court’s decision in Kelo v. City of New London (see CP&DR, August 2005, July 2005) appears to have provided an opening for longtime redevelopment opponents. In Kelo, the Supreme Court ruled 5-4 that a Connecticut city could use eminent domain to acquire houses in a working class neighborhood for economic development purposes. Public opinion regarding the decision has been overwhelmingly negative, which has permitted redevelopment opponents to seize on the issue. State lawmakers considered a number of bills to restrict the use of eminent domain or alter redevelopment practices after the Kelo decision, but the Legislature passed nothing before adjourning for the year in September.
During the hearing in Sacramento — one of several interim hearings on the subject — legislators made clear that they supported at least minor changes to current law. A staff report presented numerous possible changes that lawmakers and redevelopment experts dissected during the six-hour hearing.
State Senate Transportation and Housing Committee Chairman Tom Torlakson (D-Martinez), who is carrying a constitutional amendment to prohibit the taking of single-family homes, suggested he might support requiring redevelopment agencies to make new blight findings every 12 years and limiting campaign contributions from property owners to agency directors.
Assembly Judiciary Committee Chairman Dave Jones (D-Sacramento), a former legal aid attorney, favored increasing the percentage of tax increment that redevelopment agencies must spend on housing. Jones and other lawmakers also indicated that citizens need greater opportunities to challenge redevelopment plans. Currently, opponents have 30 days after plan approval to submit signatures on a referendum and 60 days to file a lawsuit. Lawmakers said those deadlines might be too tight.
Kehoe said that relying on courts to keep redevelopment activities in check might be inadequate. “I do believe there is a legitimate role in redevelopment for state oversight,” said Kehoe, who noted the state backfills school districts that lose tax revenue to redevelopment agencies.
Still, Democratic lawmakers said redevelopment benefits communities. “It’s my belief that when used properly redevelopment can be a good thing,” Kehoe said. “But redevelopment needs to avoid the perception of being heavy-handed.”
Republicans are more noncommittal, although Sen. Tom McClintock (R-Thousand Oaks) used the Sacramento hearing to bash redevelopment efforts. He contended that eminent domain abuse is widespread and that property owners in redevelopment project areas live in constant fear that the government will take their homes and businesses “for pennies on the dollar.”
Sharing McClintock’s viewpoint were persistent redevelopment critics, including Orange County Supervisor Chris Norby and Timothy Sandefur of the Pacific Legal Foundation. Norby called redevelopment a “corporate welfare scheme” for big-box stores, automobile dealers and football team owners.
“We’ve had 10 years of hearings and studies. Now is the time for action,” Norby demanded during the mid-November hearing.
Santa Clara County Executive Pete Kutras also urged lawmakers to take action. He said redevelopment amounts to “fiscal eminent domain” because it permits cities to take property tax revenue that would otherwise go to other public agencies. Kutras said the nine redevelopment agencies in Santa Clara County received more property tax revenue than the county itself over the last five years. Kutras said the state should hold counties harmless by backfilling money diverted to redevelopment agencies, prohibiting agencies from getting counties’ shares of property tax revenue or by giving counties some sales tax generated in redevelopment project areas.
The Legislative Analyst’s Office recommended the Department of Finance or the Attorney General’s Office review new project areas. The Attorney General’s Office backed measures to make it easier for the AG to sue over redevelopment activities.
California Redevelopment Association (CRA) Executive Director John Shirey said his organization is prepared to accept some changes. Noting that redevelopment agencies have taken only three single-family homes during the last five years via eminent domain (including two in which condemnation was used to clear up title problems), Shirey said CRA would accept a prohibition on the taking of single-family houses. Shirey said he believes state law already requires agencies that want to exercise eminent domain authority after the first 12 years to renew blight findings, and that using eminent domain for economic development absent a finding of blight is impermissible in California. He said the Legislature could make those provisions clearer.
On the federal level, Congress in early November voted 376 to 38 to approve HR 4128, which would cut off federal economic development funds for any state that permits the use of eminent domain for economic development purposes. As of late November, the bill’s fate in the Senate was uncertain.
During an Urban Land Institute conference in Los Angeles, Tim Keller, an attorney for the Institute for Justice, which lost the Kelo case, endorsed the bill. Keller said that economic development projects do not need eminent domain to be successful.
But Clinton administration Interior Secretary Bruce Babbitt, a former Arizona governor and state attorney general, decried the legislation as “federal land use micromanagement.”
Forest City Commercial Development CEO Jim Ratner, whose company is one of the country’s largest commercial developers, offered a harsh assessment of HR 4128. He said eminent domain is often an essential tool for development of projects in poor, neglected neighborhoods. Without the government’s ability to assemble land for development in these areas, projects would not get built and impoverished neighborhoods would remain poor, Ratner argued.