Effects of Ruling Against Redevelopment Agencies Unclear

Mayor Jim Janney said he was not surprised with the California Supreme Court’s decision on Thursday that upheld a new law that will eradicate redevelopment agencies throughout the state.

“If you read the laws, you cannot put together what has been torn apart,” he said.

Janney said on a local standpoint, the city could not anticipate what is going to happen. He said much of it depends on how long the process takes and still has to see what Sacramento will do.

“What do you do with a redevelopment agency when it goes away?” he said. “Results of this will be a combination of the state, redevelopment agencies and decisions made by the city. We are asking for legal advice on what steps we need to take in dealing with this decision. Treating redevelopment agencies as a real entity the city will do whatever it has to do. In the meantime though, as a council we have to act on something.”

The state's high court struck down a companion statute that would have allowed local governments to keep the agencies alive by making payments to the state.

On Aug. 3, the City Council adopted a resolution authorizing the city to participate in the voluntary redevelopment program, certain to conditions and regulations. In the resolution, council reserved the right for remittance of voluntary redevelopment payments until enforcement of any provisions of the bills.

City staff reports from that council meeting disclose that with the elimination of redevelopment agencies, the city loses $1.5 million in general fund property taxes, causing a $500,000 yearly gap. Unsent bonds would be split up, proceeds reduced from $11 million to $2.75 million, and the city would lose $3 million in housing cash balance after redistribution.

If the companion statute held, the city was looking at approximately $2.86 million in its FY 11-12 payment and approximately $673,000 each year after with the voluntary program.