Organizations that represent California’s cities and redevelopment agencies have filed a lawsuit challenging recently passed legislation that all but eliminates redevelopment as a separate entity.
The League of California Cities, California Redevelopment Association and the cities of San Jose and Union City filed will challenge in the bill as unconstitutional in the state Supreme Court, citing voter-approved Proposition 22 which barred state raids on local funds.
Read on for their joint release sent out a few minutes ago.
SAN FRANCISCO — Today, the League of California Cities (League), the California Redevelopment Association (CRA) and the cities of San Jose and Union City filed a petition with the California Supreme Court, challenging the constitutionality of AB 1X 26 and AB 1X 27, the two redevelopment bills passed as part of the state budget in June. AB 1X 26 eliminates redevelopment agencies. AB 1X 27 allows agencies to continue to exist (albeit on life-support) if they agree to pay their share of $1.7 billion this year and $400 million annually in perpetuity.
The lawsuit also requested the California Supreme Court to issue a stay to prevent the legislation from going into effect until the Court can rule on the merits of these claims.
The central claim in the lawsuit is that AB 1X 26/27 violate Proposition 22, the constitutional amendment passed by 61% of California voters in November 2010, just eight months ago. Proposition 22 was passed by voters to “conclusively and completely prohibit State politicians in Sacramento from seizing, diverting, shifting, borrowing, transferring, suspending, or otherwise taking or interfering with” revenue dedicated to local government. The revenues protected by Proposition 22 specifically include the annual increments of property taxes allocated to California’s 400 redevelopment agencies.
“California voters overwhelmingly passed Proposition 22 just eight months ago to stop State raids, shifts and diversions of local redevelopment funds,” said Chris McKenzie, executive director, League of California Cities. “The governor and legislature have blatantly ignored the voters and violated the State Constitution. We must now go to the Supreme Court to uphold the voters’ will and the Constitution by overturning this unconstitutional legislation. We are confident the Courts will uphold the will of the voters.”
Unless nullified, AB 1X 26/27 will result in the elimination of redevelopment agencies or force “ransom” payments by local agencies that will greatly reduce the ability of local agencies to pursue revitalization and job-creation projects. The measures will kill hundreds of thousands of jobs and leave many communities with no opportunity to revitalize downtrodden areas with high unemployment, high crime and significant blight.
John Shirey, executive director, California Redevelopment Association, said: “Since the budget bills passed, many redevelopment agencies have notified us that they cannot afford the ransom payment and will cease to exist. And those agencies that are planning on making the payment tell us that it will greatly diminish their ability to pursue vital local projects. This legislation is a job-killer and an opportunity killer for many local communities in need. Fortunately, voters passed Prop. 22 to put a stop to these types of destructive raids by the legislature. We must now go to the Courts to protect our local communities and economies.”
Joining as co-petitioners are the cities of San Jose and Union City. In declarations provided to the Court each city says that it currently anticipates being unable to make the payment required to avoid redevelopment agency elimination.
The City of San Jose declares that, unless overturned, AB 1X 26/27 could result in the forced termination of its redevelopment agency and kill hundreds of millions of dollars’ worth of vital redevelopment projects. These include the Strong Neighborhoods Initiative, a project to revitalize 20 of the City’s most disadvantaged and struggling residential neighborhoods; a flood control project needed to protect industrial properties; and several interchange widening projects near Hwy 101.
The City of Union City does not currently believe it will be able to pay the funds required to avoid elimination of its redevelopment agency. Elimination will kill the “Station District Plan” to create a transit-oriented development near BART and multiple rail lines, with planned housing, office, commercial development and pedestrian and roadway connections on formerly contaminated industrial land. This project has been in the planning and implementation process for several decades, and the agency has spent tens of millions of dollars. The Station District Project will remain unfinished if the Agency is dissolved.
The cities of Brentwood, Oakland, Modesto, West Sacramento, and Guadalupe also filed declarations in support of the lawsuit.
The Petitioners’ counsel are Howard Rice Nemerovski Canady Falk & Rabkin, located in San Francisco. The petition was filed directly in the state’s highest court because expedited resolution is needed. Under the terms of AB 1X 27, cities with redevelopment agencies intending to make the “ransom” payment must notify the state by October 1. The petition asks the Supreme Court to make an initial ruling on the request for stay by August 15.
Facts about Lawsuit to Overturn Unconstitutional Redevelopment Elimination/Extortion Legislation (AB 1X 26/27)
On July 18, 2011, the League of California Cities, California Redevelopment Association and the cities of San Jose and Union City filed a petition in the California Supreme Court to have the redevelopment elimination/extortion bills, Assembly Bills AB 1X 26&27, declared unconstitutional. The lawsuit also requested a stay to prevent the legislation from going into effect until the Court can rule on the merits.
Among many claims, the central claim in the lawsuit is that AB 1X 26&27 violate Proposition 22, the constitutional amendment passed by 61% of California voters in November 2010, just eight months ago.
Prop. 22’s findings and statement of purpose that were part of the ballot measure are crystal clear and capture the essence of our lawsuit:
“The purpose of this measure is to conclusively and completely prohibit state politicians in Sacramento from seizing, diverting, shifting, borrowing, transferring, suspending, or otherwise taking or interfering with revenues that are dedicated to funding services provided by local government or funds dedicated to transportation improvement projects and services.” The revenues protected by Proposition 22 specifically include the annual increments of property taxes allocated to California’s nearly 400 redevelopment agencies.
Section 9 of Proposition 22, one section of the constitutional amendment related to redevelopment, is explained with abundant clarity:
“…The Legislature has been illegally circumventing Section 16 of Article XVI in recent years by requiring redevelopment agencies to transfer a portion of those taxes for purposes other than the financing of redevelopment projects. A purpose of the amendments made by this measure is to prohibit the Legislature from requiring, after the taxes have been allocated to a redevelopment agency, the redevelopment agency to transfer some or all of those taxes to the State, an agency of the State, or a jurisdiction; or to use some or all of those taxes for the benefit of the State, an agency of the State, or a jurisdiction.”
And lastly, the official Title and Summary of Proposition 22 left no doubt that the Constitution would be changed to stop State raids and shifts of redevelopment funds. Ironically, the Title and Summary was prepared by then Attorney General Jerry Brown:
PROHIBITS THE STATE FROM BORROWING OR TAKING FUNDS USED FOR TRANSPORTATION, REDEVELOPMENT, OR LOCAL GOVERNMENT PROJECTS AND SERVICES. INITIATIVE CONSTITUTIONAL AMENDMENT.
Summary: Prohibits State, even during severe fiscal hardship, from delaying distribution of tax revenues for these purposes. Fiscal Impact: Decreased state General Fund spending and/or increased state revenues, probably in the range of $1 billion to several billions of dollars annually. Comparable increases in funding for state and local transportation programs and local redevelopment.