With Future of Redevelopment Agency in Doubt, Supporters Cheer Lawsuit

A lawsuit filed with the state Supreme Court charges that lawmakers violated the state Constitution when they passed two laws aimed at eliminating redevelopment agencies.

Redevelopment supporters in San Bruno and on the Peninsula cheered the suit, which was brought by the California Redevelopment Association, Union City, the city of San Jose, and the League of California Cities, which counts San Bruno as a member.

“California voters overwhelmingly passed Proposition 22 just eight months ago to stop state raids, shifts and diversions of local redevelopment funds,” said Chris McKenzie, executive director of the League. “The governor and Legislature have blatantly ignored the voters and violated the state Constitution. We must now go to the Supreme Court to uphold the voters’ will.”

The state will save $1.7 billion this year if the changes survive the legal threat. Gov. Jerry Brown said in this crisis budget, the state needs to conserve that money for core services such as education and public safety.

The 126-page complaint filed Tuesday claims the two measures violate Proposition 22, a constitutional amendment set up to curtail state raids on local transportation funds, which voters passed easily last year.

The first of the two new laws would shutter all 390 redevelopment agencies Oct. 1.

The second is a pay-to-play measure that would allow agencies to continue to operate at a greatly diminished level if their cities pay their portion of the $1.7 billion savings in the new fiscal year, and, starting in 2012-13 and continuing in perpetuity, part of $400 million.

For San Bruno, the tab would be $3.2 million this year, and a yearly payment of $800,000 going forward.

“Many redevelopment agencies have notified us that they cannot afford the ransom payment and will cease to exist,” said John Shirey, executive director of the California Redevelopment Association.

The suit seeks a stay on both laws until the case is heard by the court.

Brown has characterized redevelopment agencies as slush funds that encourage cronyism and gobble monies needed for human services.  Brown and the Legislature have insisted the bills are legal.

“But the California Legislature has a long history of enacting laws that are contrary to the state Constitution, only to have them overturned later,” said Kathy Fairbanks, spokeswoman for the League of California Cities.

“The ironic part is that Brown did a lot of great things in Oakland with redevelopment funds” as mayor, said San Bruno community development director Aaron Aknin.

The local picture

The timing couldn’t be worse for San Bruno in terms of reaping the value of redevelopment investment.

“It’s about to be our best times,” Aknin said.

Redevelopment funds enable local agencies to leverage public monies with the goal of attracting grants and private development to finance affordable housing and revitalization projects. It is one of the few financial tools at the disposal of cities and counties that remain since the passage of Proposition 13.

Aknin ticked off projects the city never could have undertaken without redevelopment funds:

• The Crossing Development at Tanforan, which encompasses 1,000 new condos and apartments, 12,500 square feet of retail, and a future hotel. “And those provide a lot of new tax dollars to the schools,” Aknin said.
• The police station right next to BART and Tanforan.
• A number of facades for downtown storefronts.
• The transit corridor, with its new aesthetics and uses for the area around the train station.
• El Camino Real medians. “That used redevelopment funds, which then helped us leverage grants,” Aknin said.
• Upgrades to substandard senior housing.

But the tempest throws in doubt the future of a major project to revitalize a blighted stretch of San Bruno, including the El Camino Theater and three abandoned bars.

“The theater site will be delayed at best, because all new activities have been suspended,” Aknin said. The new laws “suspend all new activities, and impact our bonding capacity for at least a year.

“We were going to focus efforts around the train area: pedestrian crossings, landscaping, and affordable housing, and public improvements in the transit corridor,” he said. “Some won’t go forward.”

The $5.6 billion redevelopment program creates some 300,000 jobs and feeds $40 billion into the state according to a fact sheet provided by the California Redevelopment Association.