The Tannery Arts Center’s final phase is dependent on redevelopment funds that were just ruled unconstitutional.
In its 24-year history, the Santa Cruz County Redevelopment Agency has built 1,385 affordable housing units, miles of sidewalks, the Simpkins Family Swim Center, the Live Oak library and much more. But its work—after it wraps up a slate of expensive projects green-lighted last summer by panicking county supervisors—is over. The California Supreme Court ruled Dec. 29 that the state’s redevelopment agencies are unconstitutional.
The ruling, while not unexpected, has forced officials across the state into their end game even as they hope state lawmakers will come up with a new mechanism to fill the void.
“There’s uncertainty for a couple of reasons,” says Santa Cruz City Manager Martin Bernal, who works closely with the city’s redevelopment agency.
First of all, Bernal isn’t sure a list of city-approved redevelopment projects will be approved by a state oversight committee. City leaders had hoped to pay for those projects with $35 million in bonds sold last year.
Second, Bernal says, Sacramento lawmakers are talking about reinstating some redevelopment funding that might allow the local agencies to carry on under circumstances that don’t violate the constitution or else finish up old business. “I don’t know how long that’s going to take,” says Bernal. If they don’t get it together, redevelopment agencies will fold in February, Bernal says. That would affect agencies associated with Santa Cruz County and the cities of Santa Cruz, Capitola, Scotts Valley and Watsonville.
No lawmakers could be reached for comment by press time. But Assemblymembers Bill Monning and Luis Alejo, who each represent portions of Santa Cruz County, have already expressed optimism for possible laws to restore some redevelopment funding. Senators Joe Simitian and Sam Blakeslee, who also represent the county, have too. Simitian has said for months he’s in the “’mend it, don’t end it’ camp” when it comes to redevelopment.
After a negative summer campaign against Sacramento politicians, the California Redevelopment Association released a statement last week drumming up support once more for redevelopment—this time with a different tone. Right now Sacramento lawmakers could be redevelopment’s last shot at redemption.
Association leaders are now asking legislators to bring back redevelopment funding in some form. Indeed, the fate of California redevelopment may rest with the very legislative body that the association so recently accused of trying to kill it.
The Housing Problem
Many officials are now wondering how local governments will fund low-income housing. Redevelopment agencies were required to spend at least 20 percent of their money on affordable housing. County Supervisor John Leopold cites the county redevelopment agency’s affordable housing projects as a key reason he and other supervisors voted last year to try and save the agency with a $10 million payment to the state.
In Leopold’s view, abandoning low-income housing projects is not an option.
“The state’s going to have to come up with a mechanism to build affordable housing and provide a new tool for communities to engage in economic development,” he says.
A redevelopment agency cleans up an area it deems “blighted” and caps that area’s property taxes. As the property values rise, any increase in tax revenues fund the agency’s projects. Critics say that money could instead go to schools, local fire departments or the state budget.
By far the most influential of those critics is Gov. Jerry Brown, who set his sights on eliminating redevelopment almost one year ago, citing the combination of a worsening state budget crisis and abuse by certain redevelopment agencies. (Palm Desert, for example, spent $16.7 in redevelopment money on a luxury golf course. Oakland used it to help fund the police department and the mayor’s salary.)
In a controversial move, Brown counted $1.7 billion of redevelopment money in the revenue column when drafting this year’s budget last spring, touching off a struggle with the California Redevelopment Association.
To some extent the association has only itself to blame, according to Brown spokesperson Gil Duran. That’s because the state legislature passed two redevelopment bills in June—one eliminating redevelopment and another allowing each agency to stay if it paid a few million dollars, depending on its size.
Furious with state lawmakers, the association called the second bill “ransom” and unconstitutional under Proposition 22, which was passed by voters in 2010, and took the bill to court.
The lawsuit backfired last Thursday, and the court ruled that instead that the agencies themselves were unconstitutional under the very same law—Proposition 22. “They had a compromise, but they rushed to court and they blew themselves up,” Duran told the Los Angeles Times.
