Lawyers to argue redevelopment fund shift

October 2, 2011

A court battle to argue the future of the state’s redevelopment agencies looms in the aftermath of a lawsuit filed this week by a coalition of 10 Southern California cities.

The complaint filed in Sacramento seeks to prevent the legislature from diverting funds earmarked for redevelopment to schools and local government. Its objective is similar to a fast-track case presently before the state supreme court brought by the League of California Cities and the California Redevelopment Association.

This latter case has resulted in a temporary halt to lawmakers’ budget manipulations involving redevelopment funds. The plan was to take $1.7 billion from the agencies for redistribution, but representatives of the agencies call the move unconstitutional. If enacted, those budget cuts would virtually eliminate the state’s 400 redevelopment agencies.

The organizations contend that the cuts violate Prop. 22, passed in November by voters, which prohibits the state from raiding transportation, redevelopment or local government money.

Last fall, most city officials in this county made clear their intent to oppose the fund shift, and the area’s state senator, Sam Blakeslee, R-San Luis Obispo, voted against it during budget debates.

“As our state struggles to recover from the recession, wholesale elimination of these agencies is the wrong path to pursue,” Blakeslee said at the time.

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I don’t know much about “redevelopment agencies” other than that they are often formed by individuals who have a financial business interest in a particular geographic area.

So, for example, the San Luis Obispo Business Improvement Association (the “BIA”) which controls business in the downtown area, including the Farmer’s Market, is a “redevelopment agency,” whose purpose is to promote business for the stores in the downtown area. I may be wrong on this, but I am using the “BIA” as an example. I am also hoping other bloggers with more knowledge of “redevelopment agencies” will correct me on this if I am wrong.

These agencies have the power to require businesses within their geographic boundaries (“jurisdiction”) to pay a fee (a “special tax?”) to benefit the purpose for which the redevelopment agency was created. So, for example, if the BIA decides putting in benches and artistic trash receptacles on Marsh Street will make it look nicer and be more pedestrian friendly, it can use the fees collected from its members to buy park benches and trash receptacles.

But not all redevelopment agencies handle their money properly. Some waste it. Some embezzle it, as we saw with the Pismo Beach Chamber of Commerce director a year ago. And some redevelopment boards use their political influence for unlawful or unethical purposes.

Like Jan Marx did when she used her political influence in a surreptitious way to defeat legitimate business development in another neighborhood, on the Dalidio property.

When a public official Like Marx ( who by virtue of her finacial assistance to the BIA becomes financially involved with it,) uses her power to deliberately manipulate or obstruct business development, because she wants a private business to fail, then the redevelopment agency operates outside the law, to defeat its own purposes.

This gives rise to the question whether it should continue to impose fees on the downtown businesses because what it does is more harmful to the “community” than if it never existed.

Other development agencies are genuinely interested in funneling the money to the community for the benefit of all, and they do the right thing. So, the fact that the state wants to do away with “redevelopment agencies” because a lot of them mismanage the grants and state funds that are doled out to them, makes sense.

But what about the redevelopment agencies that genuinely put the money into actual neighborhood development for the benefit of the public?

Perhaps the best choice is to make financial transactions between these agencies and the people funneling money to it more transparent. Maybe their corporate structure should be changed to eliminate government officials from their membership. Maybe the city attorney should not have been the one to draw up the bylaws for the BIA. Is there a conflict of interest in such a relationship which would tend to make the city government want to cover up the illegal activities of the BIA as opposed to prosecuting it?

Where could I find out what the definition is of a “redevelopment agency” that distinguishes it from other forms of business entities?