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Ruling: State can eliminate redevelopment agencies Fri Dec 30, 2011 12:19 pm
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Ruling: State can eliminate redevelopment agencies


SACRAMENTO, Calif. (KGO) --
A costly State Supreme Court decision will affect cities all over California. Hundreds of cities are losing redevelopment money from Sacramento. It will save the state a lot of cash, but could be devastating for local communities.




Many cities consider redevelopment money a vital tool for economic development and job growth, but just like this legislature had the power to create these agencies, the state Supreme Court says it has the power to eliminate them.

Cities across the state are marking the end of an era that began in the mid 1940s. In San Jose, redevelopment money funded everything from the HP Pavilion and the Tech Museum to affordable housing.


Related Content

Story: Court splits decision over redevelopment funding

Story: State Supreme Court to rule on redevelopment agencies "The same is true north San Jose. Thousands of jobs were created. That would not be there without the tool of redevelopment," said San Jose City Councilmember Rose Herrera.

In these tough budget times though the state wanted the $1.7 billion funneled to redevelopment agencies. Thursday, the state Supreme Court made two key rulings that do away with the agencies even if they were willing to pay into a fund to stay alive.

"The court says that the legislature can eliminate redevelopment, that's constitutional. On the other hand, they said you can't force a pay to play so as a result, there will be no redevelopment," said San Jose City Attorney Rick Doyle.

The decisions are considered a key victory in the state's effort to balance the budget. It heads into the New Year with a $13 billion shortfall.

"This is the critical step to make sure that schools in this state got more than $1 billion, not only for this year, but is a funding stream that will be going into future years," said H.D. Palmer, a California Department of Finance spokesperson.

The court ruling will help shore up funding for public education, but even with the elimination of some 400 redevelopment agencies statewide, many education advocates say it does not solve an ongoing problem.

"There's not a lot of good news on what we are spending per students K-12, so this is not even something I would consider a victory. It's kind of maintaining a bad situation. It prevented it from getting worse, but it's not something we should be celebrating," said Stephen McMahon, the San Jose Teachers Association president.

Cities are definitely not celebrating. Some say the elimination of redevelopment agencies will be devastating and all of them say it will change business as usual.

"We have been preparing for it and we recognize we need to move forward with economic development strategies that really involve partnerships with the private sector, rather than large subsidies from the public sector," said San Jose City Councilmember Sam Liccardo.

Redevelopment agencies have been on life support for months now. The state Supreme Court ruling means that they'll officially take their last breath on May 1, 2012.

The proposed new 49ers stadium in Santa Clara has redevelopment money in it. That city is counting of up to $40 million in redevelopment money for the stadium, but like many cities with projects in pipeline, there were efforts to protect that funding, but it's really unclear as to how those creative maneuvers will happen. The stadium is a $1 billion project and the majority of that is financed through bank loans, a hotel tax, and the money the 49ers are kicking in.



http://abclocal.go.com/kgo/story?section=news/local/south_bay&id=8484439&rss=rss-kgo-article-8484439
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Ruling: State can eliminate redevelopment agencies Fri Dec 30, 2011 12:19 pm
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