California Redevelopment Agencies Face Elimination on Feb. 1
More than 400 Community Redevelopment Agencies (CRA) in California will begin to phase out their operations this week as a decision by the California Supreme Court upholding a state law mandating their abolition goes into effect on Feb. 1.
In a decision announced on Dec. 29, the CA Supreme Court unanimously upheld a new state law abolishing the Los Angeles Community Redevelopment Agency and hundreds of similar agencies across the state, but ruled that a companion law forcing CRAs to give a portion of their tax revenues to the state was unconstitutional.
Redevelopment agencies are funded by the increase in tax revenues generated by projects in their areas. The agencies use the revenue to invest in additional projects mainly in blighted parts of cities.  The Court’s decision means that all RDAs will be dissolved under the constitutional Dissolution Act, and none will have the opportunity to opt into continued existence under the law ruled unconstitutional, the Alternative Redevelopment Program Act.
The ruling was a crushing blow to redevelopment agencies, which sued earlier this year to block both laws. Because the court ruling also nixed the plan to allow local governments to buy back into redevelopment, the CRAs will be phased out when their contracted projects are completed.
After the high court’s ruling was announced, the California Redevelopment Association and League of California Cities, plaintiffs in the lawsuits, called on state lawmakers to urgently bring forward legislation to revive the agencies.
However, Gov. Jerry Brown, hailed the state Supreme Court’s decision. Brown supported the plan to abolish the RDAs as part of his ongoing effort to close the state’s multi-billion-dollar budget deficit. Brown said the court’s ruling “validates a key component of the state budget and guarantees more than $1 billion of ongoing funding for schools and public safety.” However, six of the high court’s seven justices agreed that Proposition 22, passed by voters in March, forbids the state from forcing municipal agencies to transfer money to the state.
About The Author
Theron Rust
Having worked with redevelopment and Community Development Financing in several western states, it is hard to visualize the demise of Tax Increment Financing. My first experience in the redevelopment process of renewing blighted neighborhoods was in Portland, Oregon Project R-1. this project not only improved a very run down area of the city but restored the South Auditorium Project area into a sustained public/private development that paid for itself and reduced property taxes within the entire City of Portland. Tax Increment Bonds for this project were sold and repaid in less than one-quarter of the time of the debt, showing how successful redevelopment could be.
This was during the early 1960′s where the “Federal Bulldozer” approach to Urban Renewal was the only game available. Several legislative amendments to the redevelopment process were made over the following years that proved that urban redevelopment could be a very sustainable process for renewing our cities blighted areas and improving resdients qnd businesses lives.
There were, of course, over zealous redevelopment officials that stretched the program to its ultimate limits that resulted in some bad publicicty for the program. But with the fine tuning of the laws the program was still the only way cities had to renew and meet the neighborhood needs of their communities.
The federal redevelopment program was reduced over the years that even caused a more difficult path for the cities renewal programs, leaving only the ingenuity of redevelopment officials and city councils to come up with ways to repair the neighborhoods in an equitable manner and not overburden local taxpayers with additional debt. Tax Increment Financing seemed to be only answer allowing new development to pay for itself.
The California financial crisis along with other states shortfalls has caused many good programs for the cities and agencies to be reduced or deleted. California is setting an example for other states to follow. It is a sad time in our nations economy that will continue to affect our cities and local communities for many years to come.