Court eradicates redevelopment agencies

December 29, 2011

State budget writers can scrub redevelopment funds used by California cities to redevelop blighted areas, the state’s supreme Court ruled today. [LATimes]

As a result of the decision, San Luis Obispo County’s five redevelopment agencies stand to lose a combined $4.5 million within the next year alone and several projects may be in jeopardy.

Now, funds which last year would have been earmarked for local redevelopment agencies can be used to help balance the state’s current budget, and will pave the way for future lawmakers to use redevelopment property tax revenues for balancing budgets.

The court delivered a second blow when it deemed a companion bill that would have permitted redevelopment agencies to continue if they shared revenue unlawful. Several local redevelopment agencies including Grover Beach, Atascadero and Paso Robles had planned to remain operational through the companion bill.

The state’s budget woes caused officials to remove the funding mechanism from the budget in June, but cities and their redevelopment agencies sued to block the plan. A period of intense lobbying followed, with city leaders from all over the state trooping to Sacramento to plead for retention of the funding.

Gov. Jerry Brown will now have time to incorporate the decision into his new budget when he puts it on the table during the first week of January. Local municipalities will also need to redo budget plans as a result of the courts decision.

Arroyo Grande will lose funding allocated for improvements to the Car Corral public parking lot in the Village, and the Police Station project. The city may also need to sacrifice its efforts to help fund affordable housing projects and marketing programs designed to attract new businesses and provide incentives for others to go “green.”

“It will likely require the city (Arroyo Grande) to cease all economic development efforts,” said Arroyo Grande City Manager Steve Adams said in July.

In Atascadero, the abolishment of redevelopment agencies could affect Atascadero’s future improvements because redevelopment bond revenues are core to the funding for the Historic City Hall repairs.

Paso Robles officials said redevelopment money was expected to fund handicapped access improvements including new curb ramps on Spring Street and in the downtown area, in addition to the construction of new fully-accessible restrooms in City Park.

“If we are not able to use redevelopment funds for these improvements, there could be significant fiscal impacts as the improvements were ordered by the court as a consequence of litigation,” said Paso Robles City Planner Ed Gallagher in July.