How to resolve AdBlock issue?
“Basically the decision has ended redevelopment in California,” Lakeport Community Development and Redevelopment Director Richard Knoll said Thursday.
“We were certainly hoping this would not be the result,” said Lake County Administrative Officer Kelly Cox, who added that he and his staff were in shock over the decision. “This is the worst case scenario.”
It’s also left local officials trying to sort out an uncertain future, and what will happen to important redevelopment-owned properties in the cities of Lakeport and Clearlake, as well as along the county’s Northshore.
Cox said he and his staff are working through the decision and reviewing the legislation to understand what’s in store for Lake County.
“We’ve got a lot of work to do now, and we have to do it quickly,” he said.
It’s the same in Lakeport. “I think from our perspective making our way through this opinion and what it means to us will be our focus over the next few days,” said Knoll.
At stake are projects like the Lucerne Hotel – proposed to be a college campus – and Clearlake Oaks’ new senior center, parks in Clearlake Oaks and Lucerne, and downtown improvement projects in Lakeport and Clearlake.
Interim Clearlake City Administrator Joan Phillipe said she found the court’s decision “extremely disappointing.”
“Redevelopment has been an asset for this city,” she said, adding that the expectation was that the city would continue using redevelopment.
Gov. Jerry Brown, who started out his term earlier this year by announcing that he wanted to abolish redevelopment completely, welcomed the decision.
“Today’s ruling by the California Supreme Court validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety,” he said in a statement issued by his office.
“Now he’s got exactly what he wanted,” Cox said of Brown.
The California Redevelopment Association, which was the lead plaintiff on the lawsuit against the state over redevelopment bills passed as part of the state budget process this summer, called the decision the “devastating.”
The association, along with another plaintiff in the case, the League of Cities, reported in the wake of the decision that they were calling on the state Legislature to convene “to fix this worst case outcome.”
“Redevelopment is indispensable to cities to spur economic development, create jobs and improve communities,” said League of California Cities Chris McKenzie.
Interpreting the legislation
In July 2011, the California Redevelopment Association, League of California Cities, and the cities of San Jose and Union City filed California Redevelopment Agency v. Matosantos to challenge the constitutionality of ABX1 26 and ABX1 27.
ABX1 26 eliminates redevelopment; at the same time, the Legislature passed AB1X 27, which allows agencies to continue to operate if they paid a total of $1.7 billion in this fiscal year and $400 million to schools and special districts in subsequent years.
The California Redevelopment Association argued that both bills violated 2004’s Proposition 1A, which protects local government revenues; Proposition 22, passed in November 2010, which prevents the state from borrowing from local governments; and Article 16 Section 16 of the California Constitution, which explains tax increment revenue, the amount of increased property tax value due to redevelopment activities.
The state Supreme Court’s 83-page decision, which can be viewed below, upholds AB1X 26, noting that the Legislature "may, but need not, authorize redevelopment agencies."
At the same time, a majority of the court ruled that ABX1 27 was unconstitutional, finding that it violated a subdivision of Article XIII of the California Constitution, which had been added to the constitution by Proposition 22, meant to stop the state from borrowing from local governments.
Chief Justice Tani Cantil-Sakauye, writing for the dissenting justices, disagreed with the majority’s conclusion that AB1X 27 is unconstitutional.
“The language of Proposition 22 constrains the Legislature from requiring ‘a community redevelopment agency’ from making certain allocations of its tax increment, either ‘directly or indirectly,’ she wrote. “Proposition 22 does not address a local ‘legislative body’ nor does it address in any respect the use of otherwise unrelated local revenue to pay a ‘levy’ on tax increment funds.”
The California Redevelopment Association said immediate legislative action is needed, and it’s calling on members, local governments and redevelopment allies to contact legislators to revive redevelopment. Its board of directors and staff also have begun implementing an aggressive plan to restore redevelopment.
“CRA is ready and willing to engage in immediate dialogue with Legislators and the governor on a meaningful ‘fix’ to this problem,” said Jim Kennedy, the association’s interim executive director. “We have ideas for ways to restore redevelopment while also providing the state budgetary relief in a manner that doesn’t violate Prop 22. Time is of the essence, and the future of California’s economy is at stake. We hope legislators will do the right thing, for the sake of our future.”
The association said that lawmakers made clear that the legislative vote was intended only to extract revenues from redevelopment agencies, not abolish them altogether.
“[T]his bill is the fair and right choice because it does not in fact eliminate redevelopment but it reduces its size,” they quoted Senate President Pro Tem Darrell Steinberg as saying at the time.
Assemblyman Wes Chesbro’s office did not respond to request for comment from Lake County News on Thursday.
However, during an interview with Lake County News at the Lucerne Hotel in August, Chesbro said that while the governor had wanted to completely abolish redevelopment, “We said no,” he said of the Legislature.
He said redevelopment has been useful, but also has been abused, and that it was siphoning money from the state budget, schools and special districts which, during the financial hard times, was difficult to justify.
Rather than do away with it completely, Chesbro said the Legislature devised the compromise – requiring the annual payments – to keep redevelopment.
It was just one of many hard votes that had to be taken in the state budget process, he said.
Cox said he took his concerns about redevelopment’s future to both Chesbro and state Sen. Noreen Evans before the Supreme Court decision was reached, and felt they were receptive.
Local prospects appear grim
Redevelopment projects around the county and the state stopped in their tracks over the summer, with a stay resulting from the California Redevelopment Association’s lawsuit.
In Clearlake, Phillipe said there is nothing currently in the works, although they had been trying to move forward on some low-income housing projects.
Knoll said Lakeport has a number of projects – including one to improve the downtown area’s streets and sidewalks, and the facade improvement program – either under way or being contemplated.
In Lucerne, the renovation of the Lucerne Hotel – which had progressed rapidly since the Lake County Redevelopment Agency purchased it in 2010 – also ground to a halt due to the stay on work.
That put a serious wrinkle in the county’s effort to work out a partnership agreement with Southern California-based Marymount College, which is considering having a college campus at the 1920s-era building, known to the community as “The Castle.”
“My main concern right now is what’s going to happen with the Castle,” Cox said.
This fall the Board of Supervisors, at Cox’s suggestion, had agreed to support the county moving forward in a partnership with Marymount College in the event that redevelopment no longer existed.
“Hopefully there is still a way we can work it out,” he said.
Other significant assets include the land on which the new Clearlake Oaks senior center is slated to be built, a project years in the making, along with Holiday Harbor in Nice and Clarks Island in Clearlake Oaks, Cox said.
Then there is the Lucerne Promenade, composed of lakeside properties the county and the redevelopment agency has purchased. Cox said those have been used to develop the town’s parks, with some of those redevelopment-owned parcels in the midst of developed park areas.
What would happen to those properties is one of the unknowns that Cox believes will have to be cleared up through new legislation.
“Every asset that the agency owns now is going to be impacted by this,” said Cox.
Unless there is subsequent legislation, Cox said all of the agency’s Northshore assets are in jeopardy, as the legislation calls for agency assets to be disposed of at fair market value.
He said the legislation also provides for an oversight committee composed of representatives from the county, the Lake County schools superintendent, the largest special district in the redevelopment area and community colleges to oversee how the assets are disposed of as the agency phases out.
He said the legislation doesn’t make clear just how much latitude that committee has in its decision making.
There are still “enforceable obligations,” such as bond payments, that will need to continue, said Cox. But redevelopment funds now largely will be dispersed back to other taxing agencies, such as schools.
He said he and his staff have further analysis to do in order to determine just exactly what will happen with agency assets when the agency ends in February 2012.
Knoll said the city of Lakeport is not in a position to lose assets such as parks. “We put our funding primarily in projects.”
Clearlake potentially has a few property assets that could be of issue, said Phillipe, and she’ll be discussing them with the Clearlake City Council at the council’s next meeting in January.
Possibly among those fixed assets are the city’s corporation yard and Clearlake City Hall. Phillipe said she is working to ascertain how much, if any, redevelopment money was spent to develop those properties.
Phillipe said the successor agency – which will be responsible for paying outstanding indebtedness incurred by the agency – will have to make the final determination regarding the disposition of any city redevelopment agency-owned assets.
The Lake County Redevelopment Agency, which just marked its 10th year, has brought “dramatic improvement” to the Northshore at an incredibly rapid pace, said Cox.
“I’m very thankful for what we’ve achieved in the time the agency has existed,” he said.
He said there is still much to do, and he felt it was sad to be stopped only 10 years into the plan’s 30-year implementation.
Cox said he didn’t find it appropriate when some agencies attempted to transfer funds and assets to keep them from the state, adding that he believes local governments need to participate to a reasonable extent in helping to address the state’s budget problems. “We all are in this together.
He added, however, that eliminating redevelopment isn’t reasonable.
Knoll, who like Phillipe also called the California Supreme Court decision “disappointing,” pointed out that Redevelopment has been active in California for more than 50 years, with 400 agencies – big and small – doing significant amounts of projects and putting people to work.
“That all ends today with decision,” he said.
John Jensen contributed to this report.
E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it. . Follow Lake County News on Twitter at http://twitter.com/LakeCoNews, on Tumblr at www.lakeconews.tumblr.com, on Google+, on Facebook at www.facebook.com/pages/Lake-County-News/143156775604?ref=mf and on YouTube at www.youtube.com/user/LakeCoNews .
