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Redevelopment doomed
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The future of redevelopment - a statewide program which devotes a share of property tax to reducing blight and increasing property values - now appears to be non-existent.

The death of redevelopment follows a long-awaited Wednesday State Supreme Court decision which upheld the State Legislature's right to eliminate redevelopment agencies across California, but ruled unconstitutional a measure which would have allowed those agencies to remain open should they make annual payments to the state.

"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," said Gov. Jerry Brown in a statement.

But local officials see the move as just the latest in a series of state takes from local government.

The action robs Ceres of $25 million in bond proceeds, which were being paid back by a tax increment revenue stream of $8 million annually.

"I don't think it was smart on their part," said Brian Briggs, the city of Ceres' redevelopment and economic development manager, "to take away the number one tool that cities had to improve infrastructure and get us out of the recession."

The state and court actions mean Ceres will have no more funds to invest in community infrastructure, specifically on efforts to revitalize downtown Ceres.

"The redevelopment agency will no longer be able to invest in infrastructure necessary to attract development (in downtown Ceres)." said Briggs.

He said the city will now only have the general fund to pay for projects, which is bare bones for services.

The city used its redevelopment agency to fund the Costa Fields Baseball Complex, the Ceres Community Center and its parking lot and purchase lots in downtown for later development. The agency also set aside 20 percent of its funding for affordable housing opportunities.

Only projects started prior to June 30, 2011 may proceed. Specifically, that means Ceres can continue with plans to improve its sewer system with the $550,000 Barbour lift station on Mitchell Road.

The lawsuit traces back to June, when the State Legislature sought to close a $1.7 billion budget shortfall. Their solution: forcing redevelopment agencies statewide to either close - redirecting their funding to the state's general fund - or requiring those agencies to make "voluntary" payments to remain open - which would be diverted in lieu of the state's obligation to K-12 education.

The California Redevelopment Association argued that the "voluntary" payments were illegal under 2010's Proposition 22, a constitutional amendment which explicitly prohibits "seizing, diverting, shifting, borrowing, transferring, suspending, or otherwise taking or interfering with" revenue dedicated to local government, including redevelopment dollars. A lawsuit based on that argument was quickly escalated to the California Supreme Court, and implementation of the plan was put on hold until a ruling could be issued.

On Wednesday, the court overturned the "voluntary" repayment scheme, but upheld the state's move to shutter all RDA agencies - a move which both guarantees the state will not receive the $1.7 billion it had estimated, and that RDA agencies have no option to remain open.

The ruling represents the worst possible outcome, according to California Redevelopment Association Board President Julio Fuentes.

"Without immediate legislative action to fix this disaster, this ruling is a tremendous blow to local job creation and economic advancement," Fuentes said. "The legislative record is abundantly clear that Legislators did not intend to abolish redevelopment. We will take lawmakers at their word and ask that they immediately reconvene to pass new legislation to revive redevelopment in California."

Court unanimous

The court's ruling to allow the dissolution of redevelopment agencies was unanimous, arguing that as the Legislature had created redevelopment agencies, they also could dissolve them. Additionally, Proposition 22 did not explicitly guarantee the continued existence of redevelopment agencies.

But Prop. 22 did ban required payments based on redevelopment agency tax revenues, making the "voluntary" payment plan unconstitutional, according to a majority of justices. Only Chief Justice Tani Cantil-Sakauye dissented, arguing that Proposition 22 did not expressly prohibit an opt-in payment plan, and noting the legislature had drafted the measure so as to not violate Prop 22.

During the budget process, lawmakers lauded the redevelopment plan in part because it would allow redevelopment to continue.

"This bill is the fair and right choice because it does not in fact eliminate redevelopment but it reduces its size," said Senate President Pro Tem Darrell Steinberg during budget discussions.

Following the Supreme Court's action, all required deadlines for RDA dissolution have been extended four months.

During that time, the California Redevelopment Association has said they will work with lawmakers to create a solution whereby redevelopment can continue and the state can pay its bills as originally intended.