San Diego politicians and land-use officials have become polarized over an unusual controversy pitting one of the city's largest private employers against an apartment developer in the city's downtown area. At issue is whether the proposed Fat City development in the Little Italy neighborhood threatens the operations of nearby Solar Turbines.  Solar is a unit of Caterpillar Corp. that employs 3,800 workers in a plant on the city's industrial waterfront, plus an additional plant in Kearny Mesa. The company has argued that the proposed Fat City apartment project, located 240 feet from the plant, could result in air-quality complaints from future residents, and threaten its operations. Solar appears especially anxious because it plans to install new spray booths and other equipment that could conceivably boost its emission levels. Any complaint, according to the company, could trigger a new air quality assessment of the plant, at a cost of $100,000.  A consultant to the developers, who asked not to be named, speculated that Solar had already spent as much or more on a "phalanx" of lawyers and lobbyists. This is the latest in a series of instances around California in which an existing institution has expressed concern over its environmental impact on a new project, rather than vice-versa. Recent court cases, in Los Angeles and in Dana Point (see CP&DR Legal Digest Vol. 26, No. 22  Dec. 2011), have held that the California Environmental Quality Act does not require a developer of a new project to consider this role reversal. However, in San Diego, Solar is not threatening legal action; it is threatening simply to move away of its own accord – even at its own expense.  Solar has taken an all-or-nothing position, rejecting several compromise measures, and even threatens to leave the city if the 242-unit project is approved. Public hearings in January featured a long line of Solar employees pleading with board members of the Centre City Development Corp., one of the city's former redevelopment agencies, to reject the project.  Several local officials, including the San Diego County Board of Supervisors and even the county's Air Pollution Control District of San Diego County (APCD) are backing the manufacturer. APCD director Bob Kard told reporters in January that he had never experienced a situation with housing and industry side-by-side that did not generate complaints.    The homebuilders, architect-developer Jonathan Segal and Garth Erdossy, and their lawyers claim that Solar has little or no reason to fear the new project. Although the plant currently operates within 400 feet of existing housing in Little Italy, where Segal and Garth have built several multifamily complexes in the past decade, no local resident has ever filed a complaint against Solar. Of the three types of air pollution regulated by APCD – smoke, dust and odor—none seems to apply the Solar plant. The plant site is entirely paved and dust-free, and the building, which has no smoke stacks, emits neither smoke or smell.  "I've bicycled by there every day for 20 years, and I've never smelled anything," said Richard G. Opper, an environmental attorney representing the home builders. He added that Solar's emission levels have actually fallen 80 percent as compared to an initial air quality assessment conducted on the plant decades ago, due to the installation of improved air-scrubbing technology.  The apartment developers argue that the city has no basis to deny the project, which conforms to existing zoning for residential use.   "The reason they've (CCDC) been so successful in San Diego in the last 10 years is that the city has done such a great job of making the process transparent, predictable and consistent," said developer Garth Erdossy, president of GLJ Partners, who seeks to build the project in partnership with architect Jonathan Segal. "Investors have flocked to San Diego because of this." Erdossy points out that a car painting shop, with both odor and noise, operates immediately next door the existing Waterfront Lofts in the same neighborhood, without eliciting complaints.  The developer said he and Segal have offered several compromises to appease Solar, including requirements that renters sign waivers on air-quality issues, and offering to negotiate any complaints about the plant directly with Solar, rather than refer complaints to the APCD. The developer also offered a land-swap with the city, in which the developer would switch locations with a public parking structure planned about 1,000 feet from the Solar plant. The company reportedly rejected all the offers.  On January 25, the board of the Centre City Development Corp. rejected the housing proposal by a 4-2 vote, with three abstentions. Board member Laurie Black resigned in protest, although she told the San Diego Union-Tribune that the demise of redevelopment was also a cause for leaving the board. A final decision rests with interim Centre City president Kim John Kilkenny, although any decision he makes is likely to be appealed to the city's Planning Commission.  UPDATE:  Citing the project's inconsistency with the 2008 City of San Diego General Plan Economic Prosperity Element and the Centre City Community Plan, CCDC Chairman Kim John Kilkenny today denied the Coastal and Centre City Development permits for the proposed Fat City Lofts project. The entire decision, findings and analysis is now posted on CCDC.com under the News section.  Kilkenny offered the following statement. "After extensive evaluation, my decision is based on a few key factors. Neither the City of San Diego's General Plan nor the 1992 Centre City Community Plan establishes the proposed residential project as a land use that must be approved as a matter of right, but rather a use that may be approved depending on an evaluation of its conformance to General Plan and Community Plan policies. In my judgment, the proposed project is inconsistent with the General Plan's Economic Prosperity Element Policy and Centre City Community Plan, which recognizes that base sector industries should be protected and land use inconsistencies should be avoided. The construction of a residential project close to Solar Turbines would result in increased regulatory burdens which may jeopardize Solar Turbines' continued operations." Kilkenny's decision is appealable to the San Diego Planning Commission, but not the San Diego City Council.

Towards the waning moments of yesterday's UCLA Extension Land Use Law and Planning Conference in downtown Los Angeles, I was on the verge of deploying the following tweet via @Cal_Plan :  "Ucla Land Use Law Conf: am in a roomful of lawyers and all seem in accord: no one has voiced support for death of #redevelopment" I'm not even sure if Twitterese would have fully conveyed the seeming irony. In session after session, lawyers -- they of eternal contentiousness -- on the dais and in the audience alike bemoaned nearly everything about the death of redevelopment, decrying its very fact and, moreover, the sloppy -- and, indeed, inadvertent -- method by which the Legislature and governor sealed its fate. The closest anyone came to celebrating the implementation of Assembly Bill X1 26 was when they spoke of the chance for reform.  Even the redevelopment panel itself, featuring Housing Finance Agency executive director Claudia Cappio, former CRA/LA head Cecilia Estolano, attorney Iris Yang, and Fullerton community development director Al Zelinka was a strangely harmonious affair, full of the usual criticisms and of some compelling ideas for the future but with little actual debate. In truth, I think everyone is worn out -- and it was only Day Three since dissolution officially set in. In any event, if we ever sort this out, it would seem that sustainability and economic development are in and blight is out (legally, if not practically). I'm glad I didn't tweet too soon. During Q&A, Frank Gruber, an attorney and journalist based in Santa Monica, addressed the panel with, shall we say, a contrarian viewpoint. It's worth it just to quote him verbatim:  "I don't want to sound ungrateful for a great panel, but it does seem that it would have been good for this panel to have someone who is not mourning the demise of redevelopment. For a lot of us redevelopment was not a solution to a problem." "I never heard of a CRA that ever bothered with...metrics about creating middle class people. When (a panelist) said that we need government that is clear and explanation, CRA was the exact opposite. It was the kind of thing that made people suspicious of government because they just saw all this money being skimmed off and given to developers. Middle class people leave cities. They've left cities for 50-plus years because of the schools. Did the CRA ever do anything for the schools?  I remember being at a conference in 2003 when all of a sudden somebody from CRA said, 'yes, we're now working with the school district'--given that they raised $14 B in bond money." "When you think of all the irrationality that this kind of funding brought, and of course stealing the money from the county and school districts. there's nothing to stop the Legislature in Sacramento from saying…'we want 5% of all tax increment around the state to go into affordable housing,' rather than just take back the 20 percent that you were going to steal. They can do that. They can enact all sorts of funding with a rational basis for where the money comes from. All these cities are now going to get more general fund money; they can decide what they want to do with it. There's no reason to mourn redevelopment." "Jerry Brown: What a great guy. To have been a city guy and used it and realized how corruptible it was and to get rid of it." After some hemming and hawing by the panel – who reiterated hopes for a renewed, reformed system of redevelopment – Joel Rosen, community development director, City of Buena Park, offered a rebuttal to Gruber:  "I am mourning the loss of redevelopment. Redevelopment was transformation for our community, and it was transformative for many communities across the state. Were there abuses? No question. But this was a money grab. This was not about redevelopment." "I would propose something more radical: it's not about finance structure; it's about governance structure.  We need to reform governance in California. We have too many school districts, too many special districts, too many overlapping jurisdictions. There's probably a lot of money in the system."   "I would argue that redevelopment was an incredible tool for 50 years. I am mourning its loss. I am mourning the loss of friends who are losing their jobs." Ashes to ashes, dust to dust.

This week, as redevelopment agencies were shutting down in observance of yesterday's dissolution deadline, the State Senate approved a bill that would preserve former redevelopment funds that had been dedicated to the provision of affordable housing for low- and moderate-income residents. Senate Bill 654, sponsored by Sen. Darrell Steinberg (D-Sacramento), passed on a vote of 34-1. It now advances to the Assembly Housing and Community Development Committee and then to the Assembly Appropriations Committee. The bill would preserve an estimated $1.36 billion currently in the coffers of former redevelopment agencies (now successor agencies) that were earmarked for affordable housing. Municipal and county housing authorities or other approved entities can receive the funds from their respective successor agencies. Without passage of the bill, those monies would go back to the state and localities would lose what many consider to be a crucial source of subsidy for the development of affordable housing.  While housing advocates and many lawmakers have hailed the vote, they have expressed frustration that Senate Republicans refused to support the bill as an urgency measure. Therefore, rather than take effect upon the governor's signing, SB 654 would not take effect until Jan. 1, 2013. Democrats had refused to support a version of the bill that included some measures to streamline the process of dissolving RDAs.  Amid partisan tit-for-tat, Steinberg complained that the lack of an urgency measure could cost over 20,000 jobs related to affordable housing. Senate Republican leader Bob Huff (Diamond Bar) noted that it was Democrats, led by Gov. Jerry Brown, who pushed for the elimination of redevelopment in the first place. Many supporters of redevelopment have claimed that it maintained and created countless jobs throughout the state.  Steinberg has said that he may try to re-insert language that would implement SB 654 immediately upon signing.

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."

The California Supreme Court's decision to strike down AB X1 27 and uphold AB X1 26 set off a frantic timeline by which redevelopment agencies essentially must preside over their own funerals while "successor agencies" take control of their assets and contracts. Since the Dec. 29 court decision, at least one legislative effort -- Senate Bill 659 -- and two lawsuits have tried to delay dissolution, but to no avail. As such, the following timeline and benchmarks will govern the closure of redevelopemnt agencies and the ascent of successor agencies and their oversight boards for as long as is required to liquidate agencies' assets, tend to legal matters, and pay off their debts.    January 13 Counties that do not wish to serve as "successor agencies" and instead want to pass those duties on to the state must notify the County Auditor-Controller.  February 1 Redevelopment agencies are officially dissolved.  Successor agencies have the option of retaining RDAs' affordable housing functions or passing those functions off to local housing authorities or, in some cases, to the State Housing Authority.  Each successor agency must review its respective RDA's interim enforceable obligation payment schedule (EOPS), which outline the RDA's contracts and obligations. Successor agencies may modify their EOPS and may thereafter only make payments outlined in the EOPS.  March 1  Each successor agency must adopt a permanent Recognized Obligation Payment Schedule (ROPS), which succeeds the EOPS. Each County Auditor-Controller will allocate property tax increment to pay obligations enumerated in the ROPS.  April 1 Successor agencies report to the state on whether the amount of tax increment identified by the County Auditor-Controller is sufficient to fund ROPS obligations for the next six-month fiscal period.  April 15 Successor agencies submit their respective ROPSs to the State Dept. of Finance and State Controller for approval.   May 1 Oversight boards are formed and must file membership with the Dept. of Finance. Successor agencies henceforth must pay obligations in the approved ROPS; no other obligations may be paid.  May 16 and onward County Auditor-Controllers transfer funds to the successor agencies' Redevelopment Obligation Retirement Fund for payment of obligations described in the ROPS.

Among the roughly 400 redevelopment agencies that will shut down tomorrow, the vast majority have effectively elected to dig their own graves. That was one of the stipulations of AB X1 26, that cities may serve as their own successor agencies, which will oversee the wind-down of operations, liquidation of assets, and payment of outstanding obligations.  At least a handful of cities, however, have indicated that they want no part in what many consider an unfortunate process. The Los Angeles City Council very publicly voted not to serve as successor agency for the Los Angeles Community Redevelopment Agency . That vote was based in part on a city report that indicated that overseeing the shutdown of the state's largest RDA could cost the city up to $130 million -- more, by far, than the entire annual budgets of many redevelopment agencies.  In addition, the cities of Los Banos, Merced, Pismo Beach, Riverbank, and Waterford have all taken similar action as of last week. If a city opts out, then any other taxing entity that is affected by a city's redevelopment tax increment can volunteer to be successor agency. Most likely, this entity would be the county, but it could also be a school district or other special district. Thus far, no such entities have volunteered to take over. As such, the state Department of Finance will appoint an oversight board for each agency so abandoned.  Of the cities that have opted out, some were simply indifferent to the whole process.  "We didn't see a lot of benefit to the city to being the successor agency," said Riverbank city manager Pam Carder. "I know that we would get a little bit of money for administration, but the amount of work that was required for that money we just didn't see any benefit." The city councils of Pismo Beach and Bishop felt similarly.  "We have no blight and we have no bonded indebtedness," said Pismo Beach mayor Shelly Higginbotham. "It would become much more expensive for the city to take on that duty." Bishop assistant city clerk Denise Gillespie said that the city's redevelopment agency had been essentially dormant for over ten years and had "zero money;" it was dissolved Jan. 9.  Carder said that serving as successor agency would not save anyone's job either, since the city does not employ full-time redevelopment staff people. "It didn't affect our budget because we have no staff people that are being paid for out of redevelopment," said Carder.  The City of Merced, however, had deeper concerns.  "We felt that there was not enough clarity in the legislation to hold the successor agency harmless," said Merced city manager John Bramble. Bramble noted that, in part because AB X1 26 was passed hastily last year, legislators may have inadvertently left out language that legally protects cities that serve as successor agencies. "The Legislature cannot go backwards and determine what their legislation intent was.  Both AB 26 and AB 27 were approved at the end of the session…we found nothing that there was no liability to being successor agency."  Bramble said that the city, which has been famously devastated by the recession and housing collapse, did not have the financial resources to defend against litigation that could arise in the course of dissolution. Being held liable, he said, would be even worse. So the city was happy to shift both the burden of dissolution and the associated legal responsibilities to a successor agency.  Bramble said that, as in Los Angeles, Merced's City Council was also concerned about the cost of dissolving the RDA. Although AB X1 26 provides for some administrative costs, Bramble said "the amount of funds that are available to unwind the RDA assets does not even come close to what we have in terms of staff resources or cost" and that Merced's full-time city is obligated to the City Council, not to a potentially all-consuming special project.  Merced's approach does not, however, mean that it isn't reasonable for hundreds of other cities to accept the burden of serving as successor agencies. In many cases, creating a successor agency temporarily salvages the jobs of at least some RDA employees. As well, cities have an interest in making sure that successor agencies use a light touch when liquidating assets.  "There's always the desire to maintain control," said Bramble. "If they have a project that isn't quite finished and they're not quite sure where it stands, they're going to want to make sure it's done right."  Many cities, however, may not have made such measured calculations. Cities had only two weeks to decide on whether to serve as successor agencies, and those that may not have been certain were automatically opted-in under AB X1 26. By contrast, cities like Los Angeles and Merced took pains to understand what that choice entailed.  "We dropped everything for the next two weeks," said Bramble. "I involved city attorney, the finance office, my office, and economic development and RDA staff to go through absolutely everything." With that decision made, it is now up to the state to assign three-member oversight boards that will serve as successor agencies, unless any other taxing entity shows interest by Feb. 1. In some cases, relatively obscure taxing entities could have stepped up if they so chose. "If a city declines, then it's up to one of the other taxing entities to decide whether they want to become the successor agency, and if none of them step into that, then it goes to the state," said Jim Kennedy, interim executive director of the California Redevelopment Association.  For instance, the Merced Redevelopment Agency could, potentially, be succeeded by the Merced County Mosquito Abatement District. Not that it would choose to take on that task.  "There's not a lot of rewards to being a successor agency," said Marty Coren, a consultant and head of a California Redevelopment Association committee that is studying the RDA transition.  UPDATE:  The morning of Feb. 1 Gov. Brown named twelve individuals to serve on four governing boards--one for each county with cities that opted out--responsible for dissolving local redevelopment agencies. The governing boards' rosters can be found here , on Gov. Brown's website.

UPDATE: Friday afternoon Superior Court Judge Lloyd G. Connelly refused to grant a stay against the dissolution of redevelopment, rejecting arguments advanced in two separate suits, led by the cities of Cerritos and Carlsbad. The ruling means that the dissolution of redevelopment will proceed Feb. 1 as ordered by the state Supreme Court. With seven days to go before redevelopment agencies vanish from California's landscape, two consortiums of cities are sending up two different hail Marys in the hopes that the Sacramento Superior Court will give redevelopment a stay of execution -- or even wholesale salvation.  Friday afternoon, the court will hold preliminary hearings on both suits. The first, filed by a consortium of cities led by the City of Cerritos, seeks to overturn Assembly Bill X1 26 on constitutional grounds. It had originally been brought by the cities before the state Supreme Court rendered its decision in California Redevelopment Association vs. Matosantos but was put on hold while that case was decided.  The other, unrelated, suit was filed by a consortium of cities led by the City of Carlsbad following the Matosantos decision. It alleges that AB X1 26 can only be valid if its companion budget bill, AB X1 27, were enacted. But, because AB X1 27 was struck down by the Supreme Court, plaintiffs in the Carlsbad case contend that AB X1 26 can never go into effect.  Both suits--either of which, if successful, could delay or prevent implementation of AB X1 26, regardless of the other's success -- pursue different legal approaches than the CRA did in the Matosantos case. CRA focused largely on Proposition 22, which, it contended, prohibited the state from appropriating redevelopment funds and, by extension, from dissolving agencies.  "We raised constitutional challenges that were in addition to the primary focus of the lawsuit brought by CRA and League," said Bill Irkhe, partner at the law firm of Rutan and Tucker, which is representing the City of Cerritos.  "Per the request of the attorney general's office, we stipulated to holding this case off until the League and CRA case would be decided." The Cerritos suit centers on three main claims. The first is that AB X1 26, which was passed by a simple majority, effectively redefines redevelopment's tax increment as an ad valorum property tax -- thus fundamentally changing the nature of the tax. That sort of change, plaintiffs argue, would require a two-thirds majority vote in the Legislature. Second, plaintiffs argue that AB X1 26 results in violations of federal and state contract law by impairing or invalidating contracts between redevelopment agencies and their respective cities. Third, plaintiffs claim that Gov. Jerry Brown's and the Legislature's efforts to go after redevelopment funds overstepped their bounds by responding to a short-term budget emergency with a remedy whose effects may last for 30 years, which is the lifespan of a redevelopment project area.  Irkhe said he believes that these arguments may have sway in part because, according to a footnote in its decision, the Supreme Court explicitly did not consider this line of argument in deciding Matosantos . Therefore, the Superior Court may consider it an open legal question and therefore grant the injunction that plaintiffs are seeking.  Plaintiffs in the Carlsbad case -- which names the state and five counties' auditor-controllers as defendants -- contends not that AB X1 26 is invalid but rather that it cannot be enacted until AB X1 27 is enacted. The Carlsbad suit alleges that the enactment of AB X1 26 is contingent upon the enactment of AB X1 27, in part because the Legislature intended the two laws to work in concert. Carlsbad city attorney Ron Ball said that AB X1 26 depended on the enactment of AB X1 27 -- which occurred -- and on the inclusion of Part 1.9, which is the part of AB 1X 27 that calls for redevelopment agencies to make voluntary payments to the state.  "The whole law was determined to become unconstitutional, so Part 1.9 never arose," said Ball. "So how could the law become effective? There were two contingencies, one of them it made, and one failed."  "The state's position is contrary," said Ball. "They feel that either the law was not void ab initio, or else it was valid for a while before the Supreme Court turned it down."   Plaintiffs' argument, according to Ball, differs from the "severability" argument that arose in Matosantos, in which attorneys for the state successfully argued that the Supreme Court could invalidate one of the laws without invalidating the other.  "We learned more about severability than I ever wanted to know," said Ball. "That's fine. But it didn't answer this question." Ball said that there is a chance that the judge could rule from the bench in favor of the plaintiffs, thus effectively halting dissolution. However, he said it is more likely that the judge rule that the preliminary injunction is either granted or denied.  Neither groups of plaintiffs are collaborating directly with the CRA or League of California Cities, which were the lead plaintiffs in the Matosantos case.  Both cases are scheduled to be heard 1:30pm in Sacramento Superior Court.

This week Gov. Jerry Brown announced a draft package of reforms to the California Environmental Quality Act. The reforms are intended to streamline and simplify certain types of urban developments in order to reduce costs and hardship for developers who are pursuing environmentally friendly infill projects.  The reforms, drafted by the Office of Planning and Research, come in accordance with Senate Bill 226 and Assembly Bill 900, both of which were signed into law late last year.  Once these draft reforms are finalized, they will simplify the approval process for infill projects by eliminating repetitive studies of environmental effects already addressed in other planning documents, such as general plans and zoning codes. This will help reduce the time and cost often associated with infill projects, while also allowing cities to focus on new or unique projects that help create jobs, revitalize cities and promote transit. SB 226 also exempts solar projects located on existing rooftops and parking lots. AB 900 sends CEQA litigation for certain large projects directly to the Court of Appeal and requires a decision on the merits in a short timeframe. The law also offers immediate help to projects that provide California with the most economic and environmental benefit. Together, CEQA reforms in SB 226 and AB 900 are intended to reduce repetitive documentation and expedite litigation timelines while preserving informed decision-making and mitigation of environmental harm.  OPR's SB 226 guidelines can be found here ; the Natural Resources Agency's SB 226 guidelines can be found here . The AB 900 guidelines, released last month, can be found here .

Despite intense lobbying from supporters of redevelopment, Senate Bill 659, sponsored by Sen. Alex Padilla (D-Los Angeles) appears headed for defeat. Senate President Pro Tem Darrel Steinberg (D-Sacramento) yesterday told the Sacramento Bee , "It's not going to happen."  The bill would have delayed dissolution until April 15, allowing agencies and cities more time to organize their affairs. Steinberg said that the bill does not have enough support and that it would likely not even come up for a vote. Many have complained that the Feb. 1 deadline imposed by the Dec. 29 Supreme Court ruling has come far too quickly and that dissolution will not be a smooth process.  Meanwhile, Gov. Jerry Brown has said, "I don't think we should delay this funeral," referring to the demise of redevelopment. Without the governor's support, SB 659 was largely a moot point. Some are speculating that Brown intends to support a new version of redevelopment but that he wants to wipe away the old system so that lawmakers can fashion a new, reformed system from scratch.

With only a few days to go before the February 1 deadline to dissolve the state's redevelopment agencies, the Department of Finance has published a website describing the dissolution process as mandated by Assembly Bill X1 26. The site is intended to answer a host of questions that have arisen among many agencies and cities throughout the state.  Agencies and cities are cautioned that the website and its documents are meant for guidance only and do not constitute legal advice. Finance acknowledges that "the timeframes for dissolution activities may become very compressed" -- as many supporters of redevelopment have claimed -- and that the department cannot name specific individuals who will be working on dissolution nor can it promise that cities will be able to discuss the dissolution process with particular staff members. The department has, however, set up a hotline and an email address: redevelopment_administration@dof.ca.gov and 916.445.1546. Finance encourages redevelopment agencies and their successors to immediately begin work on Recognized Obligation Payment Schedules (ROPS) and in organizing the oversight board. Both Controller and Finance staff will be reviewing enforceable obligation schedules and jointly determining which items to review in more detail and make objections to. Finance has also released a pair of "frequently asked question" documents. One document answers questions about bond repayments  <.pdf> , in response to concerns that the California Redevelopment Association and others had raised about whether the schedule outlined in AB X1 26 would enable successor agencies to pay bond obligations on time. DOF assures agencies that the legislation does provide for on-time payments.  Another FAQ  <.pdf> concerns the structure of successor agencies and their relationship with their respective jurisdictions, especially with regards to labor regulations. Many cities are concerned that the dissolution of redevelopment agencies means that city staff who are paid partially with RDA money will have to be let go. DOF confirms that successor agencies may release superfluous employees. Any employees that are retained become employees of the successor agency but not of the city or county.

Last week bond rating agency Moody's took California's redevelopment bonds down a notch , and today fellow rating agency Fitch is expressing similiar concerns.  Citing concerns over the "short timeframe" that last month's Supreme Court decision dictated for the dissolution of the state's roughly 400 active redevelopment agencies, Fitch has placed all bonds secured by tax increment financing on Rating Watch Negative. Fitch is also concerned by the lack of progress in shoring up what redevelopment's supporters consider flaws and shortcomings in AB X1 26, the legislation that mandates and guides the process for agencies' dissolution. February 1 is the date on which agencies are supposed to be turned over to successor agencies.  According to a statement  <.pdf> released by Fitch, "While the intent to uphold existing obligations is clearly stated in the legislation, the mechanics of implementation are not." To determine whether or not outstanding bonds will be repaid, Fitch intends to review the process of handing off RDA assets and obligations to successor agencies and will review each agency's and oversight committee's ability to mange those assets and obligations.  Fitch's review will include the following: Once available, Fitch will review the guidelines and discuss with the appropriate county auditor-controllers their plans to adhere to guidelines that are being drafted by the California Association of Counties (CSAC). Fitch will assess whether each county auditor-controller, successor agency, and board is planning to track tax increment revenue generated by project area and for housing and non-housing purposes, pursuant to the pledges to bondholders, and whether each of these entities is prepared to apply procedures in a way that assures the flow of tax increment revenue pledged to secure each series of bonds. Fitch will evaluate whether the guidelines or subsequent legislation, if any, address the concern that the payment schedule is funded on a six month basis, rather than annually, which could result in funds being transferred to overlapping taxing entities prior to funding a full year of debt service. Fitch will confirm that Fitch-rated bonds are included on the schedule of payments permitted to be paid by the agency.  Fitch will evaluate the ability of a 'designated local authority' to staff and oversee a successor agency should no existing local entity elect to become the successor agency. While Fitch believes these uncertainties will be resolved for all or most affected entities, if any of these plans or procedures are inadequate to ensure timely payment of debt service, Fitch will take appropriate rating action on those individual credits.

If you listen carefully, you might be able to hear the sounds of hammers in some parts of California. After nearly five long years of recession and stagnation, recent reports indicate that new residential construction may be picking up.  A recent survey from the National Association of Homebuilders indicates that confidence among home builders has risen to its highest level in four years. Rising from nearly zero may not sound like much--the survey's overall rating of 25 still indicates that conditions are "poor"--but it's still an improvement. Construction in Los Angeles seems to bear out this trend, with $1.51 billion worth of projects--dominated by high-density rental apartments--underway in the second half of 2011; that's a 6% increase over the previous year. Meanwhile, home sales in the Bay Area rose 4.4% in December as compared with December 2010; prices, however, have continued to decline. In  Orange County , a developer has evoked headier times with the purchase of a 16-acre tract entitled for up to 143 home at an estimated $2 million per acre. And even in Sacramento , where construction of single-family homes hit a near standstill, the Sacramento Bee reports that a "modest building boom" of six projects is bringing over 250 units to high-density areas of the state's capital.  Clearly, this trend doesn't yet mean that a million tract homes will bloom. But it does mean that developers may be emboldened to restart dormant projects and even seek out new ones. In many cities, there are far fewer planners now than there were when the bubble first burst, but they now might have more work to do than they've had in a long time.