“Bah Humbug!” Sez Mayor

Four days after Christmas, the California Supreme Court belatedly dumped a ton of very dirty coal into the stockings of 400 local governments throughout California, issuing a ruling that effectively bans redevelopment agencies (RDAs) throughout California. Santa Barbara mayor Helene Schneider greeted the news with a grim “Bah, humbug!” adding, “This was definitely the worst case we could have imagined.” As a result, she said, the City of Santa Barbara would be out up to $5 million a year in revenues that could otherwise fund affordable housing. Santa Barbara’s most conspicuous recipient of such revenue is Paseo Nuevo mall which would not have been built without RDA funding.

The state Supreme Court effectively upheld part of a massive money grab engineered by Governor Jerry Brown and the State Legislature to raid the coffers of redevelopment agencies statewide. But legislating that grab proved tricky because, in 2010, state voters overwhelmingly approved Prop. 22 which explicitly prohibited the Legislature from taking money from redevelopment agencies and local governments to help balance the state’s massive deficit. In fact, Prop. 22 went so far as to incorporate this prohibition into the state Constitution. The Legislature’s solution to Prop. 22 was to pass a bill abolishing RDAs outright and then passing another bill that would allow RDAs to rise from their legislative ashes if they paid the state a substantial fee first. This pay-to-play provision — described as “extortion” by local government advocates — would generate an estimated $1.7 billion for the desperately cash-strapped state, money that could be spent on education or public safety. The California League of Cities sued, charging the two-step maneuver clearly violated the letter and spirit of Prop. 22.

In a nutshell, the high court ruled that the Legislature was endowed with all the requisite legal authority to abolish all RDAs; it took an act of the State Legislature to create them in the first place. But the court also ruled unconstitutional the second provision that enabled RDAs to pay the state to recreate themselves. As Dave Mullinax, a lobbyist with the California League of Cities that brought the lawsuit, put it, “It was our Armageddon scenario.”