Even as the redevelopment wind-down process continues, the Legislature is beginning to play around with possible ways to bring it back in a more limited form. Many of the ideas involve tinkering with tax-increment financing in ways that will hold the state financially harmless. Others would allow cities to keep some or all of their former redevelopment agencies' cash and land assets, which are likely worth several billion dollars. "The body is dead and it is sitting in our front yard rotting away," said Assemblyman Chris Norby, a Fullerton Republican and longtime redevelopment opponent, at an Assembly hearing Wednesday. "Some people are picking at the carcass and carting pieces away. But now the undertaking must begin." In a prepared statement to the hearing, Assembly Speaker John Perez said: "It was never the intent of the members of the Assembly to eliminate redevelopment" but rather "to rein in bad practices." Whatever the Legislature is considering, however, Gov. Jerry Brown has not tipped his hand. So far Brown has shown no willingness to consider reviving redevelopment in any form. The only representative of Brown's office who spoke Wednesday was Pedro Reyes, policy chief at the Department of Finance, who talked about the wind-down process. He said Finance had reassigned 20 auditors to work on post-redevelopment issues and will likely reassign more in the future. A parade of witnesses at the Assembly hearing proposed a variety of post-redevelopment solutions. For example, Claudia Cappio, director of the California Housing Finance Agency and Gov. Jerry Brown's former housing chief in Oakland, called for a "permanent revenue source for affordable housing." She said she had not cleared the idea with Brown and she did not specify a possible source. However, at a Senate hearing two weeks ago she mentioned the possibility of a real estate transfer tax, a technique used to fund both affordable housing and open space protection in other states. Most of the discussions had to do with tax-increment financing, however. As Michael Coleman, a fiscal consultant to the League of California Cities, out it: "TIF has a long history all over the world of being used and used well." It was the cities' expansive use of TIF, of course, that did redevelopment in. With little state oversight, TIF had expanded to include close to $6 billion a year, or about 12% of the state property tax. Because the state is required to backfill the financial loss to schools, TIF was costing the state approximately $3 billion per year. Many of the new TIF ideas involve collaborative relationships among local governments that receiving a portion of the property tax funds and/or holding the state harmless. The most obvious possibility would be to permit cities and successor agencies to receive TIF on all property tax revenue except revenue that goes for schools. This would still drain property tax from counties and special districts, so some proposals would require the creation of a joint-powers authority including those other agencies in order to perform redevelopment functions. John Lambeth of Civitas, the state's business improvement district guru, asked the Legislature to give cities the power to create TIF districts in which they divert only the tax-increment that would otherwise flow to the city general fund – generally about 15% of total property tax. He called this strategy the Downtown Economic Vitality Authority, or Downtown EVA.  Meanwhile, on the Senate side, Senate president pro tem Darrell Steinberg has been proposing that cities and successor agencies be permitted to keep former RDA assets even if TIF revenues are redistributed. At the Senate hearing a couple of weeks ago, Steinberg noted that RDAs cash assets of at least $2 billion – and possibly more – at the time they were dissolved on February 1. The value of RDA real estate assets is impossible to determine at this point, but it is probably billions more. In addition, RDAs were sitting on about $1.3 billion in unencumbered funds earmarked for affordable housing. Both Senate and Assembly bills are likely to include protections for the $1.3 billion as well as language designed to avoid a "fire sale" of former RDA assets. Quick sale of assets is encouraged by the language of AB 1x 26, the law that eliminated redevelopment.

All the urban planners in the country are in Las Vegas this week, and it's clear they have a love/hate relationship with the place. Vegas is kitschy and over the top, and at first glance it always looks like the least sustainable place on the planet. Vegas is acres of neon plastered across the front of 30-story casinos in the 100-degree desert – each casino more outlandishly upscale than the other – along with the occasional lake and 200-foot water fountain. The thousands of attendees at the American Planning Association conference in Las Vegas this week like to say they hate all this stuff, and no doubt a good percentage of them will flee to the desert to tromp around among the spring wildflowers. But they'll definitely be missing out. Because after the latest building boom, there's no denying it: Vegas is the most rapidly evolving – and, in many ways, the most exciting – urban environment in America. The Strip is the densest employment center in the West, and because many hotel and casino workers make modest incomes, Vegas has one of the fastest-growing transit systems in the country. Cities all over the country have dreamed of monorails, but Vegas built one. Thousands of people mob the sidewalks every day and night. Rich and poor live alongside each other – not always in a graceful coexistence, but in close proximity to one another. Planners think great cities are created by thoughtful analysis and political leadership that recognizes eternal land use principles. But Vegas is a not-too-subtle reminder to planners about how great cities are really created: You stuff vast amounts of money into a tiny space for decade after decade until the mixture of wealth, commerce, entertainment, and culture becomes so combustible that it finally explodes. Paris, London, Tokyo, San Francisco, Chicago, New York – all were built on this model. Vegas isn't there yet – but it's getting close. You'll often hear planners compare Vegas unfavorably to New York, but the truth is that Vegas is probably more like New York at this point than any other American city. Indeed, it has positioned itself effectively to become the next New York. The most obvious comparison is in the area of live entertainment. New York has been the center of live entertainment in America for a century and a half, since the beginnings of vaudeville. But Vegas is catching up fast. Live entertainers who used to have to commute from New York for special gigs can now make a living year-round in Vegas, and they choose to live here. Las Vegas is also replacing New York as the new headquarters of the deal-based economy – but with a twist. At its peak, New York was one big office, where people shuttled around doing deals during the day and going to expensive dinners and fancy shows at night. Vegas is one big hotel – with the same result. The only difference is that the dealmakers live here only temporarily – a few days at a time for their trade show – rather than permanently. Tell me this isn't a great city in the making. – Bill Fulton

Well, local governments around California finally got their wish: The staff at the state Department of Housing & Community Development that reviews housing elements has been cut to the bone. So what does this mean about state review of housing elements – and, by extension, state law about housing elements as well? In approving the 2011-12 budget back in June, Gov. Jerry Brown gutted HCD's Housing Policy Division – the only office at HCD dependent on the General Fund and the one that handles review of housing elements. In all, 10 positions were eliminated. It'll be almost impossible for HCD to maintain a brisk schedule of reviewing housing elements, as it has done over the past few years. As CP&DR recently reported, interim HCD Director Cathy Creswell – who ran the Housing Policy Division for many years – says that the number of housing elements up for review next year will decrease and therefore HCD will be able to keep up with the work load (see CP&DR Vol. 26, Issue 14, July 2011 http://www.cp-dr.com/articles/node-3003). For now. But the next couple of years will be important in the world of housing elements – primarily because the Regional Housing Needs Assessment process (which determines how many housing units each local government must plan for in its housing element) is now tied to SB 375. As regional planning agencies approve their "Sustainable Communities Strategies" under SB 375, a whole new set of regional housing concerns will emerge – and the next round of housing element review will ramp up. Will HCD be ready? And will the agency be sufficiently plugged in with the Air Resources Board and other state agencies that are driving SB 375 implementation? But maybe asking whether HCD will have the resources to do things the same way the agency's always done them is the wrong question. Framing the issue that way reduces the discussion – unfortunately – to the question of how much money HCD is going to get out of the General Fund in any given year. The answer for the foreseeable future is: Not much. So maybe it's time to revisit the whole question of what a housing element is, what it is supposed to accomplish – and consider making changes to the law that will make it both more effective and less expensive for the state to administer. When I teach classes about planning in California, my standard joke is that the housing element law is just strong enough to be annoying and just weak enough to be useless. Not everybody thinks this joke is funny, least of all my longtime friend Cathy Creswell, who will point to any number of communities where sites for high-density housing have been identified and rezoned, thanks to state review. Fair enough. But the housing element law has always been caught in the crossfire of all kinds of political attacks and counter-attacks. The housing element is the only part of the general plan subject to state review, which makes it an especially annoying part of life for local planners. (And, anyway, if the state is going annoy the locals by reviewing general plans, why just housing elements?) It was originally designed as a "fair housing" exercise (and must deal with housing for a whole series of special populations, such as the homeless and farmworkers). Yet increasingly HCD focuses on the supply of housing -- hence the concern about high-density zoning – rather than just its distribution.  And there's a constant battle in Sacramento – more like a stalemate – between affordable housing advocates who want to box the local governments in, and the local governments that don't like state control. As an elected official, I have to say that a mere explanation of the housing element law almost always leads to this question: "How can the state tell us how much housing to build?" Finally, and perhaps most important, it's a law that focuses on planning for housing, not building housing. It's a topic of ongoing debate whether good housing elements actually lead to more housing. HCD claims that this is so; while some independent research, including from the Public Policy Institute of California, claims that this is not so. As he had with redevelopment, Gov. Brown has the opportunity to use the budget crisis to reform the way the housing element law works. Housing element activity will be brisk in the next few years; yet there is no scenario that would suggest HCD will wind up with enough money to review housing elements in the manner is has been done in the past. If the state is going to be effective in overseeing how the locals deal with housing, it's going to have to be done differently. But how? This is where the stalemate makes it tough. HCD's traditional approach has been to act as a pretty persnickety regulator, telling the locals – almost literally – which words to change in their draft housing elements. This is an understandable approach, given that many local governments have proven untrustworthy on housing in the past and that affordable housing advocates in Sacramento are always looking over HCD's shoulder to make sure the law is implemented clause-for-clause. But it won't fly in the future, if only because the state can't afford it.  So it's time for the Brown Administration to think about several reforms, including the following: ? Stripping housing element review down so that it focuses on a few key issues, like adequate sites for multifamily housing. ? Making it easier to transfer housing obligations from city to city, at least within the same housing market. ? Tying all housing funds over which the state has control – including redevelopment housing setaside money – to the goals in the housing element. ? Switching to a performance-based system, so that localities are held accountable for housing constructed rather than housing planned for. The locals always squawk that they can't control the market as to when housing actually gets built, and that's fair enough. But comparing housing entitled and housing built compared to some regional average is certainly reasonable. It's possible that even the budget crisis will not force reform in the housing arena. After all, in the end the redevelopment issue this year was not about reform but about money, even though the administration promised reform at the beginning. But if reform doesn't come now, when HCD is up against the wall on the budget, then I don't know when or how the stalemate will ever be broken.

Frighteningly enough, this is the 27th year I've attended the California Chapter, American Planning Association, conference and at least the third time here at the Fess Parker in Santa Barbara. Memories both good and weird haunt me here; I remember, for example, standing in the corridor outside the Santa Barbara ballroom in 1995 watching TV as the O.J. Simpson verdict came in. This year, I'm struck not by how much the conference has changed – it really hasn't, not all that much – but by the passing of time. Maybe it's just me, but there's a kind of a wistfulness this year, a sense of loss. Only a couple of years ago the planning profession in California still seemed robust and energetic, with planners excited about new challenges such as climate change. This year, it feels like there's tentativeness to the entire profession, as planners are continually laid off, planning departments are shut down, and young planners can't find jobs. I'm saddened this year by the absence of two esteemed professional colleagues who have passed away in the last year: Frank Wein and Dave Wilcox. Both were longtime consultants in the planning profession and both were longtime colleagues of mine – beloved by their students – at USC's School of Policy, Planning & Development. Both passed away this year – too soon -- after long and difficult illnesses. There was certainly no one more committed to CCAPA than Frank Wein, and so it's fitting that the California Planning Foundation auction is now named for him. But I'd much rather forgo the naming of the auction if I could see Frank up there again – his wry humor, his good cheer, and most of all his caring for his students and professional colleagues. Ditto Dave Wilcox. A longtime partner in the economics consulting firm of ERA (now part of AECOM), Dave was one of California planning's great characters, each year administering "The MPL Pledge" to our master's in planning students at USC while wearing a Shriner's fez and referring to himself as "El Capybara," after a rare, obscure, furry and frankly weird giant rodent. (IT was perhaps fitting at an actual capybara turned up in Paso Robles a month ago : As I said on my Facebook page a few weeks ago, back in the ‘80s when I started writing about planning in California as a journalist, I rated folks by how interesting the papers on their desk were (journalists develop the skill of reading upside down). Dave was at the top of the list. The papers on his desk were the most interesting I'd ever seen – because in his practice Dave was always in the middle of all the most interesting stuff in Los Angeles. Even the change in my own role has me wistful. CP&DR was unveiled for the first time at CCAPA exactly 25 years ago, and for many years after that I was very comfortable as the chronicler of California planning and nothing more. Yesterday I found myself acutely aware of how much my role had changed. First I participated in a redevelopment session with my longtime colleague Morris Newman. In critiquing redevelopment, Morris could distance himself from the system, calling himself "just an observer". (Admittedly, an observer who has, by his own count, written 200 articles about redevelopment.) I got up in my role as the renegade mayor who supported the governor's attempt to eliminate redevelopment and replace it with something different, carefully couching my words as advice to my fellow local government officials about how to reform redevelopment in a way that is good for "us". Later in the day, I attended two ethics sessions – a first for me at CCAPA. (As a concession to my primary role as a planning consultant, I finally took the AICP exam not long ago and, thankfully, actually passed.) Expecting to maintain a safe distance from the hypothetical ethics problems presented in the sessions, I was surprised to discover how engaged I was in them – especially the one where the mayor tries to override the staff's decision on which consultant to pick. Yes, I've been on both sides of that one in the last couple of years. But there's more to this sense of wistfulness than just Frank and Dave passing away and me playing a different role. The entire planning business in California is changing, and I cannot quite predict where we are headed. So many of the conditions we have lived with for the past generation or two are changing. Real estate development is flat and we can't predict when the market's coming back, meaning we can't use development to leverage needed change in our communities – nor use developer money to fund our practices. Local government revenue is flat and probably going down – meaning advance planning in California is extremely dependent right now on state and federal money, which could dry up anytime. And, of course, nobody knows what's going to happen with redevelopment in the long run. Cities are on the verge of bankruptcy, planning departments are being rolled up, and planners are out on the street. In the short run, all these things are harmful to the profession and to California's communities as well. But it's possible that some kind of shakeout and rethinking of how planning works in this state is long overdue. Maybe we've become too dependent on the same ol'-same ol' – tax-increment funds, developer impact fees, and so forth. Maybe it's time to find a new model – one where the local governments play a smaller or at least different role, and developers and nonprofit organizations play a bigger one. All this is in the air here in Santa Barbara this week. I just wish we were talking about it out loud.

The California Supreme Court killed redevelopment this morning, but that doesn't mean it's dead. At first glance it would seem as though redevelopment agencies have no bargaining power at all. After all, it's hard to imagine a weaker position than a state Supreme Court ruling saying you don't exist. But don't forget the most important point about the redevelopment battle: It's not about redevelopment. It's about money. And if all sides in Sacramento can resolve the money issue, the legal status of redevelopment will be practically irrelevant. There is every reason to believe a deal will be struck. It's just not the deal that the California Redevelopment Association and League of Cities were hoping for when they filed suit four months ago.  So this morning's court ruling  <.doc> is likely only an interim step. Both sides will likely be back in the Legislature within a matter of days to try to work out a deal that keeps redevelopment in some form, but transfers a couple of billion dollars of property tax revenue to the state.  In the meantime, however, California's $6 billion redevelopment system has been thrown into uncertainly. Technically, at least, no redevelopment agencies exist and no redevelopment activities can move forward. Counties and school districts will presumably move forward in creating the oversight committees required under the law to take over and dispose of redevelopment agency assets. One thing is clear: Time is on the state's side. For now redevelopment does not exist. The longer the status quo persists, the more the state can claim the money – and the farther down the line counties and school districts will go in trying to lay claim to redevelopment agency assets. If the redevelopment establishment can't strike a quick deal, we may be in for a long siege. Even if legislators and the governor are inclined to dig in their heels, however, they need to keep in mind one thing: the longer they wait to reinstate redevelopment, the more the bureaucratic infrastructure of redevelopment will deteriorate. Within weeks, redevelopment agencies are to be replaced by "successor agencies" that will essentially liquidate their assets. This means that offices will close, staff members will be laid off, and institutional memory will vanish. So folks in Sacramento need to decide quickly if they're going to salvage redevelopment, and if they do, they need to then act quickly.  The other big question is whether the state will seek to extract a substantive price from the redevelopment agencies as part of the deal. Last year, the debate revolved only around money and the Legislature didn't even consider any redevelopment reforms of redevelopment. But at least one knowledgeable insider, recently retired Senate Local Government Committee staffer Peter Detwiler, said that many legislatures have grown weary of the redevelopment establishment's "stubborn donkey" pose and will seek to tighten up the blight definition and extract other reforms as part of the deal. The permissible use of redevelopment  "can't be a big long laundry list," Detwiler said Thursday afternoon. "It has to be tight and very well crafted." On the other side, the redevelopment establishment is likely to lean heavily on logical allies – especially the affordable housing lobby and urban Democratic legislators from Los Angeles and the Bay Area – to gain political leverage in a tough situation. Within hours of the ruling's release on Thursday morning, both sides issued statements that could be considered conciliatory. Gov. Jerry Brown – who instigated the proposed elimination of redevelopment agencies in his budget last January – issued a one-sentence statement saying that the ruling "validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety."  Brown doesn't crow about the death of redevelopment. He doesn't even mention redevelopment; nor does he stake a claim to all $6 billion in redevelopment funds. He simply says the ruling means $1 billion more for schools and courts – making it easier for him to cash in last week's promise that schools will get more money in this fiscal year. Meanwhile, the CRA and the League – which have taken a slash-and-burn rhetorical approach since Day 1 of this battle – also issued a statement containing calm-it-down language aimed at making a deal. CRA's interim executive director, Jim Kennedy, said the organization looked forward to finding "ways to restore redevelopment while also providing the state budgetary relief in a manner that doesn't violate Prop 22." The League provided quotes from the likes of Sen. Alex Padilla, D-Los Angeles, a former member of the L.A. City Council, touting the benefits of redevelopment. Padilla and all other Democrats in the Legislature voted to kill redevelopment last year when they passed AB 1x 26 and AB 1x 27 as part of the budget package. The ruling in California Redevelopment Association v. Matosantos , S 194861, was surprisingly straightforward given the convoluted nature of the oral argument in front of the Supreme Court last month. And it was the redevelopment establishment's worst-case scenario: AB 1x 26, which eliminated redevelopment, was upheld. AB 1x 27, which gave redevelopment agencies the option of voluntarily paying a "remittance" to the state in order to avoid death, was struck down. The basic issue was whether AB 1x 26 violated Proposition 22, the constitutional amendment to protect redevelopment funds from state raids, which passed in 2010. The League and the CRA had argued that Proposition 22 implicitly made it unconstitutional to eliminate redevelopment, even though the whole redevelopment system had been enacted by statute rather than by constitutional amendment. In a 6-0 opinion written by Justice Kathryn Werdegar, the Supreme Court: "Proposition 22 contains no express language constitutionalizing redevelopment agencies. (Cf. Cal. Const., art. XXXV, § 1, added by initiative, Gen. Elec. (Nov. 2, 2004) ; id., art. XXI, § 2, added by initiative, Gen. Elec. (Nov. 4, 2008) .) It would be unusual in the extreme for the people, exercising legislative power by way of initiative, to adopt such a fundamental change only by way of implication, in an initiative facially dealing with purely fiscal matters, in a corner of the state Constitution addressing taxation. As the United States Supreme Court has put it, the drafters of legislation ?do[] not, one might say, hide elephants in mouseholes.? (Whitman v. American Trucking Assns., Inc. (2001) 531 U.S. 457, 468.)" On the question of AB x1 27, Werdegar wrote: "Proposition 22 … expressly forbids the Legislature from requiring such payments. Matosantos‘s argument that the payments are valid because technically voluntary cannot be reconciled with the fact that the payments are a requirement of continued operation. Because the flawed provisions of Assembly Bill 1X 27 are not severable from other parts of that measure, the measure is invalid in its entirety." Chief Justice Tani Cantil-Sakauye concurred on the AB 1x 26 portion of the ruling but dissented from AB 1x 27, claiming that while the law calls for remittances, it does not require the money come from redevelopment tax-increment funds which is the one step prohibited by Proposition 22. Building on the points she made during oral argument in November, she noted that – at least in theory – a city could use any source of funds to pay the remittance. The League and the CRA immediately tipped their hand as to what the likely negotiating points will be – and how they will build up enough political support to force a solution in the Legislature. Many urban Democratic legislators are logical allies of redevelopment and seemed uncomfortable in the party-line attack on it last year – just as Republicans seemed uncomfortable supporting it.  The CRA board reportedly met via conference call this afternoon to discuss their strategy. CRA had already indicated that it would use at least two tactics to build support: First, use the powerful affordable housing lobby as much as possible; and, second, resubmit their proposal from last year, which would permit voluntary payments to school districts in exchange for extended life of project areas. It was not immediately clear on Thursday afternoon what Brown and legislature leaders will seek to extract as a price. But one thing is clear: Time is on the state's side.

The Supreme Court's redevelopment ruling yesterday didn't just kill redevelopment agencies. By upholding AB 1x 26 – the kill-redevelopment bill – the court ruling also triggered an entire funeral procession that will shut the agencies down and transition their debt and their assets to other agencies. That process is sure to trigger more controversy – and probably lots more litigation – as cities try to protect assets they transferred away from RDAs last year and other agencies – the state, counties, and school districts – try to grab hold of them. It also puts each county's auditor-controller in the middle of this process. But AB 1x 26 essentially represents a state takeover of tax-increment funds that are not required to pay debt by giving enormous power in the process to the Department of Finance. AB 1x 26 assigns different responsibilities to five different players in the funeral procession. These are: 1. "Successor Agencies," which will usually be the underlying entity that created the RDA in the first place (usually a city but sometimes a county) 2. "Oversight Boards" for each RDA, which will mostly be controlled by counties and schools. 3. Each county's auditor-controller, who is responsible for collecting and dispersing property taxes. 4. The state Department of Finance. 5. The State Controller. Here's what AB 1x 26 calls on these entities to do: Upon dissolution of the RDA, all assets and liabilities of the RDA revert to the "Successor Agency," usually a city. At first the city would still be required to pay debt and other "legally enforceable obligations". But the city can't continue to operate as the RDA would. The auditor-controller and especially the Oversight Board has most of the power in determining what to do. By March 1, each county's auditor-controller is supposed to do an audit of each RDA's assets and required payments and provide those audits to the State Controller by March 15. This schedule was originally created based on the assumption that the RDAs would vanish on October 1, not December 29, so it's unlikely that the auditor-controllers can stick to this schedule. But this step is really important, because the auditor-controllers in each county have to create a "Redevelopment Obligation Trust Fund," where the funds required to meet RDA obligations will be placed. In other words, the city will not get the tax-increment money. The tax-increment funds required to pay RDA debt and other obligations will be placed in a trust fund and the rest will be distributed to taxing agencies as regular property tax is – which is typically something like 50% to schools, 33% to school districts, and 15% to cities, and a sprinkling to special districts. (This varies throughout the state.) Meanwhile, an Oversight Board must be created for every RDA. Each Oversight Board will have seven members: two by the mayor, two by the county board of supervisors, one by the special districts in the former RDA, one by the county school superintendent, and one by the local community college chancellor.  Obviously, in every county – and even in large cities – there will be many Oversight Boards with overlapping memberships. This is supposed to be representative of all the agencies that share property tax, but it should be obvious that counties and schools will run this show. And run the show the do – up to a point. The city prepares a debt and obligation schedule, which is reviewed by an auditor selected by the auditor-controller, as well as an administrative budget. The Oversight Board approves both. The Oversight Board is also charged with disposing of RDA assets. Government buildings get turned over to the appropriate government agency. The proceeds of other asset sales are divided among the taxing agencies proportionally. And they decide whether RDA affordable housing money will go back to the cities or go to the housing authorities instead. But the Oversight Committee is not the final word – and this is a really important point in seeing how the state is truly taking control of RDA funds. Both the State Controller and the Department of Finance play an important role in overseeing the Oversight Committees, as follows: * The "Redevelopment Obligation Repayment Schedule" prepared by every city must be approved not only by the Oversight Committee but also by both the Department of Finance and the State Controller. * The Department of Finance has the power to overturn any action by any Oversight Committee. You can see all the different messy situations that could arise: * Cities could start paying off obligations they see as binding, only to be overturned by somebody else when the repayment schedule is reviewed by the Oversight Committee or by the state, which means the cities would have to get the money back or cover the cost. *No matter where the cities land on the repayment obligations, the three review entities -- the Oversight Committee, the Department of Finance, and the State Controller -- could get into big fights over which repayments should be made. The State Controller will be more independent of short-term revenue concerns than the other two entities. And if this holds up decisions on who get repaid, this could cause concern about California in the bond market. * The other taxing entities could start suing the cities on some of the asset transfers they made away from RDAs (this is almost certain to happen). * Naïve oversight committees could go into "fire sale" mode on former RDA assets, which could have a significant impact on urban property values in the whole state. * The Oversight Comittees and the Department of Finance could get into protracted, ugly battles – even litigation – over the question of whether and how to dispose of assets. And in case you're wondering, this whole process starts … now. Yes, the redevelopment establishment will be back in Sacramento on Tuesday trying to get a new bill passed. But in the meantime, surely the Department of Finance and the counties – the two big financial losers in redevelopment – will start pushing to create the Oversight Committees immediately, and they're start leaning on county auditor-controllers to start the RDA audits right away. Stay tuned -- we will stay on this story as much as we can.

Cities and redevelopment agencies are pushing for legislation that give them a stay of execution past the February 1 deadline contained in last week's Supreme Court ruling. In last week's ruling, the court pushed the date for dissolution of redevelopment agencies back from October 1, 2011 – the date originally set by the legislature – to February 1, 2012. The redevelopment establishment is planning to push for compromise legislation to allow agencies to stay in existence – but first they have to push the February 1 date back. Meanwhile, agencies around the state are assessing the prospective damage.  City officials up and down the state have been wringing their hands over the death of redevelopment projects. The highest-profile projects are sports stadiums. The new Chargers stadium in San Diego would appear to be dead for now . The ruling also places a cloud over stadium plans in Santa Clara and San Jose for the 49ers and the A's. Ironically, the ruling might actually help Los Angeles's efforts to lure an NFL team, because the deal between the city and AEG doesn't include a traditional redevelopment component . All these moving parts might actually encourage the Chargers to move from San Diego to Los Angeles sooner ratherthan later. The biggest issue, as Ryan Lillis pointed out in the Sacramento Bee this morning, is which projects will be permitted to go forward and which ones won't . Dozens of cities – maybe hundreds – devoted last summer to earmarked future tax-increment funds to projects in hopes of protecting the money. For example, last summer Santa Monica committed $267 million in future tax-increment funds to city  projects, mostly affordable housing, Civic Center improvements, and the "Palisades Garden Walk" park across the street from City Hall. Lillis uses the specific example of the K Street Mall in Downtown Sacramento. Redevelopment planning of the 700 block is far along and the city is hopeful that the project will stick. But the plan for the 800 block is more questionable. The city committed $20 million last summer to a deal with developer David Taylor -- but it remains to be seen whether that's a legal obligation. That's a good example of how it's not clear yet what types of legal obligations will be honored under the post-redevelopment system. Clearly, tax-increment money will be used to pay off all outstanding debt. But what about contractual agreements between RDAs and developers that commit future tax-increment flow? Those decisions, as we reported on Friday, will be up to some combination of the county auditors, the Oversight Committees, and the state Department of Finance.

Google may have revolutionized our understanding of geography, but so far the world's leading internet company hasn't revolutionized the geography of commuting. So as Google contemplates its first major "campus," the City of Mountain View is looking to innovation – the coin of the realm in the Silicon Valley – to help Googlites get to work. Even if it means building a rail system that transports individual commuters around town in little capsules. Like the rest of the Bay Area, Mountain View is investing heavily in public transit, as evidenced by the fact that the downtown transit center is a hub for both Caltrain and the San Jose light-rail line. But the North Bayshore area – locale for the Google headquarters as well as offices for such companies as LinkedIn, Intuit, and even Microsoft – is two long miles away up Shoreline Boulevard, on the wrong side of a constrained overpass that spans Highway 101 and boxed in by the San Francisco Bay and the former Moffett Field Naval Air Station. Google is already one of the Bay Area's larger transit providers, and Google buses from San Francisco and elsewhere have cut the company's drive-alone rate to 62%. But the tech companies in the vicinity expect to double their employment in North Bayshore in the next 20 years to more than 30,000 workers. Google is working separately on a master plan for its headquarters. All this expansion creates a problem for an employment district that is currently little more than an overgrown office park located in what amounts to a large-scale cul-de-sac. At a transportation workshop last Friday, four experts from around the country provided ideas for Mountain View and Google to consider as the city embarks upon the North Bayshore Precise Plan. The ideas ranged from the obvious – charging employees for parking – to the far-out, such as a "personal rapid transit" system that would whisk employees to and fro within the North Bayshore area, to and from the transit center, and possibly to other destinations as well. Steve Raney of ULTRa, a company that promotes personal rapid transit systems, said Mountain View has three possible moves: First, simply charge employees for parking. Second, build housing for North Bayshore employees in and around the district. And third, create a rail-based "personal rapid transit" system that would carry a few people each in small capsules from station to station throughout the North Bayshore area and Mountain View. Such a system – operated by ULTRa  -- is already in a Even though he works for a personal rapid transport company, Raney said, "If you're doing to do one thing, do the paid parking. Don't go and build a personal rapid transit system." The City is just embarking on the Precise Plan, as well as a transportation plan for the North Bayshore area. The pending General Plan revision does call for the creation of a housing-oriented mixed-use node along Shoreline, but that clearly won't solve the commuter problem. City officials would like to connect North Bayshore to the downtown transit center served by Caltrain and light-rail, but that's not an easy task. The transit center is located in Mountain View's intimate, small-scale downtown, which is more than two miles away from Google and six slow-moving urban blocks from Shoreline Boulevard. At the workshop, the City heard an update about BART's Oakland Airport connector, a rail link that will make it much easier to travel from the Coliseum BART station to the airport, and about Portland's South Waterfront area, where the streetcar meets the aerial tram that serves Oregon Health Sciences University. But it was the personal rapid transit that caught people's imagination – complete with a variety of animated videos showing how it might work. City officials are clearly not convinced yet that this is the way to go. But according to Jerry Sanders, CEO of SkyTran, a personal rapid transit company located at Moffett Field, the city isn't the entity that should take the lead. In response to a question from a representative of Intuit, he said: "You guys are wealthiest, most sophisticated group of tech companies around. You should take the lead on this."

SAN DIEGO -- Seeking to make up for lost redevelopment funds, the City of San Diego has decided to require downtown developers to pay processing fees for the first time in decades. But it remains to be seen who will process the permits and get the money – the city's planning department or the city's nonprofit downtown redevelopment entity, the Centre City Development Corp. For decades, the CCDC and the Southeastern Economic Development Corp. have performed San Diego's redevelopment functions in the downtown and the southeast area – functions that will wind down now that redevelopment is dead. Uniquely, however, CCDC and SEDC also perform land-use permitting functions in their project areas on behalf of the city. The San Diego City Council is expected to act on the processing fees in April . CCDC has already approved the fees – assuming the city allows CCDC to continue processing permits downtown.  Speaking at an Urban Land Institute event in San Diego on Tuesday morning, CCDC's board chair, Kim Kilkenny, said his organization can process land-use permits much faster than the planning department – typically in about three months. And even though the downtown fees are much lower than fees elsewhere in town, he said, they would be enough to keep CCDC afloat.  In essence, of course, the cost of processing downtown permits is being shifted from the tax-increment flow to the developers.  Jim Oliver of the Oliver McMillin development company, another ULI panelist, said that would be enough to kill downtown projects, at least for the time being. "If you find a project that works with a nothing land cost, that's a deal you might be able to do," he said. The CCDC/SEDC setup dates back to Pete Wilson's days as mayor of San Diego in 1970s, when he decided the nonprofit approach would be more effective than a traditional redevelopment agency. For decades, CCDC has been a model for downtown redevelopment entities. Kilkenny said that without the tax-increment flow, San Diego will have to find another way to finance infrastructure downtown and in outlying neighborhoods. "Up to know, the assumption downtown has been, Densify and build infrastructure with tax increment; while the approach in outlying areas has been, Density and the infrastructure is adequate," he said. "We're going to have to start thinking about an infrastructure bond." Kilkenny also said that Sen. Darrell Steinberg's "asset bill" – which would allow redevelopment agencies to retain assets and use them as an endowment for future activities – wouldn't help CCDC. "We were in the business of taking bad property and turning it around," he said. "We owned a lot of bad properties." Sacramento City Manager John Shirey made similar comments at a ULI event in that city last week.

Is the era of smart growth over? Not exactly, but a group of panelists at the American Planning Association conference in Los Angeles suggested Sunday that we may be moving past the 2000-era concept of what smart growth is – and into a new era that combines managing growth, placemaking, climate change, demographic change, and the need for economic growth. "We are truly at the cusp of the next big thing," said presenter Tim Chapin, a planning professor at Florida State. "We are living in a time when planners and economic development are much more together than they have been in, gosh, decades." Shelley Poticha, head of the Office of Sustainable Communities at the Department of Housing & Urban Development, agreed that economic development is a vital part of the emerging new trend. "We need to turn this around to a place-based ED strategy that is very multi-layered," Poticha said. "Many communities we are working with had economies based on one or two strong sectors and one or both crashed. And so they don't have much to stand on." At the same time, she said, place-based strategies can strengthen downtowns and neighborhoods in a way that reinforces local businesses and allows wealth to stay and circulate in a community rather than leaving town. The session was the first of three at the national APA on Sunday dealing with smart growth-related issues that are covered in the current issue of the Journal of the American Planning Association. Chapin, the lead presenter, presented his concept of three "eras" of growth management in the United States – the "growth control" era of 1950-1975; the "growth management" era of 1975-1999; and the "smart growth" era of 1999 to the present. In the growth control era, growth was viewed as a problem – a cancer to be restricted and boxed in. In the growth management era, growth was considered a fiscal problem – permissible so long as it paid for itself. In the smart growth era, growth has been viewed as "an opportunity for achieving desirable development patterns," Chapin said. The "emblematic policy" in each era, he said, was the regulatory "urban growth boundary" in the growth control era; the service-based "urban service area" in the growth management era; and the incentive-based "priority funding area" in the smart growth era. Still, Chapin added, it may be time for a rebranding. "There's some sense out there that this concept of SG is a bit stale – that it has lost its resonance with the public and political leaders." He suggested that the next era of growth management will include a focus on jobs, regionalism, and other factors. He called this new era – admitting that he doesn't particularly like this term – the era of "sustainable growth". Gerrit Knapp, director of the National Center for Smart Growth at the University of Maryland, wasn't quite willing to surrender the smart growth moniker. He said the challenges remain the same: "How do we design cities that are economically efficient and globally competitive?", especially in absorbing immigrants and finding pathways to prosperity. With a wry smile, he said he didn't know what the new era should be called, but would go back to Maryland immediately and start researching the question.

Against all odds, redevelopment isn't quite history yet in California. Some projects continue. Most cities are engaged in a long wind-down process that is consuming considerable time and attention. And the state legislature is considering a variety of options to revive redevelopment, or at least get it back on life support. The current activity falls into four categories. First, there is the winding down of old redevelopment projects and disentanglement of municipal and RDA resources and staff. Second, there are the looming negotiations between the "successor agencies" (mostly the cities) and the "oversight committees" (controlled by schools and counties) over which projects can continue and how much property tax increment can be devoted to those activities. Third, some cities are attempting to cobble together alternative strategies to promote urban development. And finally, there are the surprisingly active attempts by the legislature to bring redevelopment back in some form. The wind-down of the old agencies has been painful for cities because redevelopment had become so deeply embedded in the structure and budget of almost every municipality in the state. Although redevelopment agencies were technically separate entities – and, in a few cases such as Los Angeles, operated as such – in the vast majority of cases, these agencies were a seamless part of the city government. The City Council served as the redevelopment board, the city manager served as executive director, and so forth. Although this integration made sense in terms of operational efficiency – especially for smaller cities – the real reason was financial. By integrating the RDA into the organizational structure, the city could use redevelopment funds to pay for personnel and activities that would otherwise have to come out of the general fund. Not only were redevelopment personnel paid for by redevelopment funds, so were many other staff. City managers and community development directors were often paid partly out of redevelopment funds. Public works engineers would charge their time to redevelopment projects. In Oakland, 17 police officers were being paid out of redevelopment funds. Thus, disentangling redevelopment from regular city operations has been difficult for many cities.  So too has the process of determining which activities can continue . At first, the redevelopment establishment assumed that all activities could continue so long as they were funded with bonds that had already been issued. But the California Department of Finance soon issued strict guidelines saying that just because the RDA had floated bonds, that didn't mean the activities could continue. In many cases, the Department of Finance suggested, design contracts should be terminated mid-stream and bonds should be "defeased" (backed by other city assets rather than RDA assets) or paid off. AB 1X 26 called upon the sponsorship entity to make a choice to designate itself as the successor agency to oversee the wind-down. Most cities did so, though a few – including Los Angeles – did not, meaning Governor Brown had to appoint a panel to serve as the successor agency. In most cases, successor agencies are currently trying to figure out how to persuade everybody else in the process to take a broad view of which obligations should be honored and, therefore, which redevelopment projects can continue to move forward. This process is likely to take two forms – negotiation and litigation.  On the one hand, successor agencies will likely press hard to persuade oversight committees that everybody will be better off financially in the long run if promising RDA projects are allowed to proceed. Even if the oversight committees buy this argument, however, the Department of Finance will be looking over everyone's shoulder and could reverse an oversight committee's decision. On the other hand, there is little question that California will see a raft of litigation over this issue in the next couple of years. Cities will argue that the county auditor and oversight committee didn't properly accept their list of enforceable obligations; they will also argue that they can't defease the bonds. It will be quite a while before all this gets sorted out in court. So redevelopment personnel may have been laid off, but redevelopment consultants and lawyers will do just fine. Meanwhile, cities are scrambling to find ways to keep doing redevelopment projects in the absence of the redevelopment law. First out of the gate was the inner-ring Los Angeles suburb of Alhambra , which adopted a local ordinance that gave the city many powers the redevelopment agency formerly held, including the power to buy and sell land for economic development purposes and provide financial assistance to developers. Many of Alhambra's ideas involve taking activities the city was already involved in – community development block grants and disposing of surplus property, for example – and using those activities in a focused way to continue redevelopment projects. Other cities are likely to follow suit, using sales-tax rebates more aggressively, donating city-owned land to projects, and so forth. Perhaps most surprising, however, has been the amount of activity in the legislature on the redevelopment front. Whether Governor Brown signs any bills is an open question, but both houses of the legislature have been actively pursuing redevelopment proposals.  Few legislators who voted on the redevelopment package in 2011 actually expected redevelopment to be killed. They thought they were voting on a complicated workaround to take more funds away from redevelopment agencies and still conform with Proposition 22, the 2010 ballot initiative sponsored by the cities and redevelopment agencies designed to create a firewall between the state and redevelopment funds. Still, the fact of the matter is that the RDAs had no friends in 2011 – and they do have some friends in 2012. Legislation has dealt with three issues. The first is affordable housing. When redevelopment was killed, there was $1.3 billion in uncommitted affordable housing money sitting in RDA accounts. It seems likely that the legislature will pass – and the governor will sign – legislation allowing cities to keep this money to use for affordable housing. (Update: The governor's May revise appropriates this funding.) The second issue is the other assets that were held by RDAs when they went out of business. RDAs had at least $2 billion in cash in the bank, plus – most likely – billions more in real estate assets. Many cities claim the real estate isn't very valuable, but it's hard to know for sure; the Los Angeles Community Redevelopment Agency had 400 properties in its portfolio. Darrell Steinberg, the head of the state senate, has proposed allowing cities to keep the assets as an endowment for future redevelopment activities. In theory this is a viable idea – after all, the fight in the legislature was over the ongoing flow of property tax revenue, not the assets – but either the legislature or the governor may well decide to lay claim to the money to balance the budget. The third issue is – believe it or not – bringing back the tax-increment financing system in some form. A variety of ideas have been floating, most notably allowing cities to do tax-increment financing with city and county property tax funds so long as counties agree to the idea. In theory, this too should be a viable idea, since it does not touch the property tax revenue that flows to schools. (The state must backfill property tax revenue lost to schools out of the general fund). Governor Brown has said that he would consider any redevelopment proposal that does not affect the state general fund, but it may be that 2012 is just to soon to bring back tax-increment financing. Brown may want to wait till the redevelopment carcass is colder. One thing is sure: government involvement in building urban infrastructure and subsidizing urban development is likely to return in California in some way. The state's entire policy apparatus, including the regional planning law Senate Bill 375 , points in that direction. And Governor Brown has been supportive of the policies. The question is whether – or how soon – bringing back some limited form of redevelopment will be politically acceptable.

Now that the California state budget is mostly out of the way, it's time to see what – if anything – the state will do this year to plug the redevelopment gap. And as redevelopment bills move forward, it's pretty much shaping up like this: The legislature is likely to pass something. The question is whether Gov. Jerry Brown will sign anything. So-called "policy" bills were required to clear their house of origin in the legislature by June 1. For the most part, the redevelopment-related bills sponsored by the two legislative leaders – Assembly Speaker John Perez and Senate President Pro Tem Darrell Steinberg – cleared their own houses and are now awaiting a hearing in the opposite house. It's pretty clear that some package of bills will wind up on Brown's desk in September. In general, there are three types of bills: The first set of bills deals with affordable housing. The second would bring back tax-increment financing in some form. The third would replace tax-increment financing with some other funding source. Especially with the second and third types of bills, there's a clear trend: Tie the funding opportunities to the regional sustainable communities strategies that are being created under SB 375, Steinberg's regional planning/greenhouse gas emissions reduction bill. Each leader got an affordable housing bill through their own house – AB 1585 for Perez and SB 654 for Steinberg. In different ways, both bills try to protect the 20% affordable housing setaside money that was part of the redevelopment system. Both bills seek to ensure that about $1.4 billion in "unencumbered" affordable housing money that was sitting in redevelopment agency bank accounts on February 1 stays with housing agencies, rather than being distributed to all local government agencies for general purposes. The second set of bills – which would create a new, much more focused redevelopment effort – is the centerpiece of Steinberg's efforts. SB 1151 and SB 1156 would construct a replacement system for redevelopment, requiring more cooperation with counties and tying those efforts to implementation of sustainable community efforts. These "asset bills" are probably the most controversial redevelopment bills – and the ones that would seem to stand the least chance of success. Nevertheless, Steinberg – who has made no secret of his commitment to redevelopment – is pushing them hard. Both bills target assets formerly owned by redevelopment agencies – possibly as much as $2 billion in cash and an undetermined amount of value in real estate assets. SB 1156 would allow cities and counties to jointly create a "Sustainable Communities Investment Authority," which could pursue activities under the old redevelopment law. But this arrangement would not require a finding  of blight. Rather, the new authority could pursue transit- and pedestrian-oriented developments that conform with the regional sustainable communities strategy adopted under SB 375.  SB 1156 would allow the use of the city-county portion of the tax increment to be dedicated to redevelopment, thus holding the state harmless because school property taxes are not included. SB 1151 would allow these authorities to also use the assets that redevelopment agencies had on hand on February 1. There is considerable debate as to whether RDA real estate assets were worth much by the end because so many RDAs transferred assets to their host city government in 2011. Steinberg managed to get both 1151 and 1156 out of the Senate before the deadline for policy bills at the end of May. The vote was fairly close – 22-15 in one case and 21-15 in the other. And it was mostly a straight party-line vote. All the yes votes were Democrats and all the no votes were Republicans except for two -- Democrats Lou Correa of Orange County and Rod Wright of South Los Angeles, both of whom often move in a conservative direction on sustainability issues. In theory, 1156 should not be objectionable, since it holds the state financially harmless and creates a voluntary process that requires county consent. But you never know. 1156 theoretically takes money that could be used to plug the state budget deficit. The final category of bills involves so-called "new money". The first is AB 1532, the bill that will dictate how money derived from the state's new "cap-and-trade" greenhouse gas emissions reduction program will be spent. The bill – sponsored by Perez – would allow the money to go to public transportation and local sustainability efforts – again, if they conform to the sustainable communities strategy. The bill seems likely to pass. The second bill is AB 2144, also sponsored by Perez, which would make it easier for local governments to set up an infrastructure financing district as an alternative to redevelopment. IFDs date back to the ‘90s. They permit the use of tax-increment financing for public infrastructure – but only with 2/3 voter approval. This bill would cut the approval required to 55%, as with school bonds. The new bill is especially targeted as military base reuse. It may well be that Jerry Brown still believes that the redevelopment carcass is not cold enough and therefore won't sign any bills at all this year. But at least the legislature is going to give him some proposals that meet the criterion he laid out in January – that the state budget be held harmless. We'll see what he does.