News

State court says yes to RDA shutdown

Court also strikes bill that let agencies pay state to stay open

Menlo Park bids farewell not only to 2011 this week, but also its redevelopment agency (RDA). The California Supreme Court upheld a bill that shut down the nearly 400 RDAs scattered around the state in a ruling issued on Dec. 29.

Redevelopment agencies were formed to fight blight, but Gov. Jerry Brown pushed for their elimination, arguing that diverting $5 billion in property tax revenue to RDAs left the state short on money needed for schools. The operating budget for redevelopment-related programs in Menlo Park, including affordable housing and code enforcement programs, is about $2.7 million this fiscal year.

According to the court, since the Legislature had the authority to create redevelopment agencies, it also had the power to dissolve them.

"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," Gov. Brown said in a statement released Thursday.

However, the court ruling wasn't a total victory for the governor. The agencies were eliminated by AB-26, but another bill, AB-27 – dubbed "extinction or extortion" by staff -- let agencies stay open by making hefty annual payments to the state. The League of California Cities and the California Redevelopment Association filed a lawsuit challenging the constitutionality of both bills.

The California Supreme Court ruling declared AB-27 unconstitutional based on the passage of Proposition 22 in November 2010, which made it illegal for the state to take money from local funds such as redevelopment revenue.

Losing its RDA will cost Menlo Park about $17 million in redevelopment reserve funds, and an ongoing $1.4 million a year, according to city officials. Paying to keep the agency open would have been expensive -- in September the City Council authorized a $3.5 million payment to the state, which was due in January. The annual fee after that would have been approximately $829,000, according to finance staff.

Earlier in the year the council had also unanimously approved the creation of new funding agreements and a housing authority to transfer assets out of its RDA beyond the state's reach, but city officials don't know whether the state will honor those agreements.

Asked how the court's ruling would affect the city, Interim City Manager Starla Jerome-Robinson said, "We are still sorting through the decision, but the bottom line appears to be the elimination of all redevelopment agencies in California, including Menlo Park. We need more time to understand the local impact."

Comments

 +   Like this comment
Posted by Jack Hickey
a resident of Woodside: Emerald Hills
on Dec 30, 2011 at 12:25 pm

What an encouraging way to start the New Year. Let's hope the court ruling withstands appeals. And, perhaps will will see the shutdown of old Hospital District's which have morphed into Healthcare Districts. Sequoia may be first.

Downsizing government to a sustainable level should be our policy.


 +   Like this comment
Posted by Ranch Gal
a resident of Atherton: West Atherton
on Dec 30, 2011 at 2:37 pm

Ditto Jack Hickey! They just don't seem to get that it's OUR money first, we earned it, sometimes working 16 hour days, and WE the People have a right to demand a smaller government. Our government is bloated and gotten way out of hand.
Instead of reigning in spending, they want to keep on taxing us into bankruptcy. Whenever we vote a bill down, they threaten to lay off police and firefighters instead of other bloated positions in the government. The police and fire should be a part of the budget in all cases, and the frills portion should get the boot first. But that's not politically savvy to get re-elected.
Goodbye "redevelopment agencies" !


 +   Like this comment
Posted by truth
a resident of Menlo Park: Belle Haven
on Dec 30, 2011 at 10:30 pm

When someone claiming to represent an entire district shows such a lack of knowledge and intelligence on a topic as important as the RDA, it means vote this bum out as fast as possible. Hickey = clueless to the services we lose in Belle Haven. Police, after school and teen programs, the Willow Business redevelopment, all in jeopardy.

But Libertarian Hickey either does not care about the other half or does not understand.

Either way, you gotta fire that guy.


 +   Like this comment
Posted by POGO
a resident of Woodside: other
on Dec 31, 2011 at 10:10 am

yawn


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