State court upholds abolishing redevelopment agencies

<p>Officials in Sonoma County struggled Thursday to gauge the local impact of a state Supreme Court ruling that upheld the state's elimination of redevelopment agencies.</p><p>“There's more questions than answers right now,” said Gabe Gonzalez, city manager in Rohnert Park, which stands to lose about $1.5 million a year in general-fund revenues as a result of the ruling.</p><p>Uncertainty remained about the ruling's implications, especially to redevelopment projects already under way, including in Roseland, Boyes Hot Springs and a swath of Santa Rosa that takes in Coddingtown mall, Railroad Square, a chunk of downtown, the West End, South Park and Apple Valley. </p><p>The court's decision spurred overwhelmingly negative reactions from officials at agencies that earmark redevelopment money for special projects, often using it to leverage private investment.</p><p>It “is the worst of all the possible scenarios,” said Dave Gouin, Santa Rosa's director of economic development and housing.</p><p>“It potentially does a great deal of damage to affordable housing,” for which 20 percent of all redevelopment property tax revenue is set aside, said John Lowry, executive director of Burbank Housing, a Santa Rosa-based nonprofit developer.</p><p>But schools officials, who hope revenue that has been going to the agencies will flow their way instead, greeted Thursday's decision warmly.</p><p>“That money was being siphoned off from local schools,” said county schools superintendent Steve Herrington. “It's beneficial to us that (the) agencies are no longer funded. It's going to have a long-term positive effect.”</p><p>The 85-page ruling said the state can legally abolish redevelopment agencies, a move Gov. Jerry Brown took to help fix a budget deficit.</p><p>The court also said the state couldn't permit agencies to continue operating if they shared a portion of their property tax revenue with the state, a compromise the state legislature had reached. Some agencies said that provision amounted to a requirement that they pay a ransom to the state.</p><p>California's redevelopment agencies and cities had challenged the state's actions. According to the state Redevelopment Association, the agencies control $5 billion in annual tax revenue.</p><p>The ruling could effectively shut down the redevelopment agencies maintained by the county and its nine cities. Together those 10 agencies took in roughly $70 million last year in property tax revenue meant to create affordable housing and make other improvements in areas defined as blighted.</p><p>Sonoma County has three such areas, Roseland, the Springs area of Sonoma Valley and the Russian River. The ruling will hit them hard, said Kathleen Kane, executive director of the Community Development Commission, the county's redevelopment agency.</p><p>“It means a loss of $7 million into communities that really do need work in affordable housing, infrastructure and economic development,” Kane said.</p><p>In Roseland, where residents have for years been working to refashion a largely derelict shopping center into a community shopping, housing and plaza area, the ruling prompted new concerns.</p><p>“This is a whole other thing that we now have to understand the ramifications of,” said Magdalena Ridley, a neighborhood resident and member of the Roseland Redevelopment Project Area task group.</p><p>The Community Development Commission in April bought half the shopping center for $3.5 million. While differences over the project's form remain, the purchase had been seen as a big step forward.</p><p>The state's approach to disbanding the agencies “does seem to give us some flexibility” in regards to pursuing projects that are under way or for which the agency has contracted with other agencies for work, Kane said.</p><p>“But it's not clear how we can exercise that,” she said. “Whether those ongoing projects, especially in Roseland, and Highway12 in the Springs, are allowed to continue will make a huge difference into how much impact (the ruling) will have.”</p><p>Redevelopment agencies, established in 1945, raise money through property taxes and bond sales. Supporters say they have been key to creating jobs and revitalizing rundown and struggling areas, mostly in urban areas. </p><p>Critics, though, have said monies often have been spent on nonessential projects while benefiting developers and sucking money from local governments and particularly, schools.</p><p>“Although we don't have a firm number on it yet, we're comfortable saying it will be more than $1 billion for schools this year,” said H.D. Palmer, spokesman for the state Department of Finance. </p><p>One expert, though, said no one won in the ruling.</p><p>“The Supreme Court managed to do something that no one asked them to do, which hurt the state, hurt economic development, violated the intent of the state legislature, and did not provide a dime to school kids,” said Murray Kane, a Los Angeles attorney who specializes in redevelopment law. “It's pretty amazing.”</p><p>Kane said the additional monies school districts will get from property tax revenue will be offset as the state cuts back on what it has been giving them.</p><p>Just as the state's action to disband the agencies led to political fights and lawsuits, so too will the court's actions, Kane and others said.</p><p>“There are many, many questions about its applicability which are unanswered, so they have managed to also generate a massive amount of litigation in the future,” Kane said.</p><p>In Rohnert Park, Gonzalez said, “We'll be working with our legislators to see if they can pass some emergency legislation to undo” the law abolishing the agencies.</p><p>“I don't think we're at the end of the story,” said Lowry of Burbank Housing.</p><p>You can reach Staff Writer Jeremy Hay at 521-5212 or jeremy.hay@pressdemocrat.com.</p>