Local Redevelopment In Question As Lawmakers Go Back To Drawing Table

California lawmakers passed a state budget that was sent swiftly on its way to Gov. Jerry Brown's desk for what turned out to be a prompt veto today.

It's back to the drawing table for legislators, but a fierce policy debate has emerged on the phasing out of local redevelopment agencies by Oct. 1. Earlier this year, Palm Desert city leaders the potential elimination of these agencies.

Redevelopment is a process that allows local government, under the auspice of local redevelopment agencies (RDAs), to use increased property tax to obtain and repay bonds that cover the cost of redevelopment projects in designated blighted areas.

redevelopment projects in Palm Desert include the $848,149 renovation of fire stations No. 33 and No. 71, $2.6 million in improvements on Cook Street at Country Club Drive and Hovely Lane and the construction of a $1.3 million road at Cal State San Bernardino's Palm Desert Campus.

Two bills that address redevelopment were included in Wednesday's budget package: ABX1 26, which eliminates redevelopment agencies and creates successor agencies; and ABX1 27, which states that agencies that make annual payments into the General Fund -- to the tune of $1.7 billion collectively -- are exempt from elimination. The annual payments for cities and counties would be calculated by the Department of Finance.

Palm Desert Mayor Jean Benson called on the governor to veto the bills.

“The proposed legislation would have drastic consequences for our community and force additional layoffs from a city staff that has already been reduced 25 percent over the last two years,'' Benson said. "Additional layoffs from our already depleted staff would negatively impact our ability to provide city services.”

Standing in strong opposition to the bills are the California Redevelopment Association and the League of California Cities, which announced they are considering a legal challenge if the bills pass.

“We have been preparing for this contingency and have a legal team on board and ready to take action. The legal team’s review of ABX1 26 and ABX1 27 has already found a long list of challengeable issues,” according to a statement Wednesday from the California Redevelopment Association. (Click here to see the issues.)

A March report from the state Controller's Office (see attached PDF file) blasted some of California’s RDAs. The criticisms pointed out loose definitions for what constitutes a blighted area, failing to pay about $33 million owed to the state's public schools, poor tracking when it comes to the number of jobs created by redevelopment projects, accounting deficiencies, questionable payroll practices, faulty loans and the inappropriate use of affordable housing funds.