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Calif. Supreme Court Rules State Can Close Redevelopment Agencies

California cities that have come to rely on redevelopment dollars to help fund affordable housing projects, and create much needed construction jobs in blighted neighborhoods must now rethink how to achieve those goals. Today the California Supreme Court ruled that the state does have the authority to dissolve redevelopment agencies. There are about 400 throughout the state contributing more than $2 billion dollars annually in economic activity. The ruling is a big win for Governor Jerry Brown and state lawmakers who voted to abolish the agencies to help close the state budget deficit. (Host: Kelly Wilkinson)

December 29, 2011 -- 5:30 PM

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Kelly Wilkinson: California cities that have come to rely on redevelopment dollars to help fund affordable housing projects and create much needed construction jobs in blighted neighborhoods must now rethink how to achieve those goals.

Today the California Supreme Court ruled that the state does have the authority to dissolve  redevelopment agencies. There are about 400 throughout the state contributing more than $2 billion dollars annually in economic activity.

The ruling is a big win for Governor Jerry Brown and state lawmakers who voted to abolish the agencies to help close the state budget deficit.

Alan Auerbach is director of the Robert D. Burch Center for Tax Policy and Public Finance at U.C. Berkeley.

Mr. Auerbach, what does this mean to the state's bottom line?

Alan Auerbach: Well, it'll mean a little bit more revenue for the state this year and the years to come, they were talking originally about over a billion dollars this year and somewhat less in years to come. It'll be a little bit different form that because the court ruling only approved one of the bills that was passed and so these redevelopment agencies will actually disappear under the ruling. But nevertheless there will be a lot of money saved by the state, of course, that money is going to come from the redevelopment agencies who don't have that money now.

Wilkinson: Different communities use redevelopment differently. In San Jose, for example, the city designated most of the downtown as a redevelopment district.

Here's City Councilmember Sam Liccardo.

Sam Liccardo: There's no question that downtown has benefited enormously from the tool of redevelopment. But we will find other ways to continue to attract companies here and to revitalize the downtown core.

Wilkinson: So Mr. Auerbach, what options do cities have now?

Auerbach: There are other existing programs for things like low income housing. There's a federal low income housing tax credit for example is still in place and administered at the state level and provides a way to get incentives to companies for building low income housing. So to the extent that redevelopment agencies were trying to do that there are still programs in place.

But for specific objectives that redevelopment agencies were trying to accomplish,  it's not exactly clear what they'll do to come up with the money they've lost through this ruling.

Wilkinson: Affordable housing advocates say they're worried that this ruling deals a big blow to affordable housing is funded and put together.  Here's what  Julie Schneider with the Policy Director for Housing California had to say:
     
Julie Schneider:  I think it's a devastating blow.  Redevelopment is local money that provides the crucial matching funds for virtually all state, federal and private sources of financing.  It's often the first money into a project to get it up and running.  So, I think it's going to make it incredibly challenging.

Wilkinson: So it sounds like you're saying there's other ways to fund affordable housing?

Auerbach: Often projects that benefit from the federal low income housing tax credit get some sort of additional funds at the state and local level, for example through redevelopment agencies. So there will be some decline in incentives for affordable housing in areas that have been throwing in additional money, but there still are programs in place.

You know, with a lot of what's going on in the state right now, the question isn't so much whether these are valuable programs, the question is where to cut. Giving that cutting has to be done, or taxes have to be increased, and of course it's very difficult to raise taxes in California.

Wilkinson: And today already the California Redevelopment Association is saying it's going to go back and work with legislators to try and preserve some aspect of redevelopment?

Auerbach: Well, the question is where is the money going to come from? It's part of the governor's agenda to shift responsibilities to the local governments without giving them enough money to pay for it. It's what we're observing at the national level to, the federal government is shifting responsibility onto the states and not giving them the money to pay for it. It's what governments do when they don't have enough money.

Wilkinson: Alan Auerbach is director of the Robert D. Burch Center for Tax Policy and Public Finance at U.C. Berkeley. I'm Kelly Wilkinson.

   

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