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In what has been called a David versus Goliath victory, the California Supreme Court ruled Thursday in favor of Gov. Jerry Brown’s plan to disband redevelopment agencies in California, and opponents of redevelopment in Sacramento wasted no time to celebrate the success.
“After years of opposition to redevelopment activities, the abuse of government power and confiscation of property for private use, our day finally came,” Moe Mohanna, a local real estate developer, said Tuesday.
The California Supreme Court ruled Thursday to uphold the redevelopment “elimination” bill, but struck down the bill that would have allowed agencies to make “continuation payments” to stay in business.
The two bills were passed as part of the 2011 state budget and caused a flurry of activity for redevelopment agencies across the state.
The California Redevelopment Association and the League of California Cities quickly challenged the new laws in court.
Meanwhile, redevelopment agencies got to work coming to terms with the possibility that they would have to either “opt in” to a new program – which would require annual payments in the millions of dollars – or submit to having their agencies phased out permanently.
In Sacramento, the City Council and the county Board of Supervisors chose to keep the Sacramento Housing and Revelopment Agency active by agreeing to the required “continuation payments” outlined in the legislation.
If the court had upheld both bills, the SHRA would be preparing to make the first of those payments due in 2012 – an estimated $22 million total – to keep the SHRA going.
The ruling to uphold the elimination bill, however, is more than a game-changer for redevelopment agencies – it’s a game-ender.
“We’re shocked,” La Shelle Dozier, executive director for the Sacramento Housing and Redevelopment Agency said Wednesday. “Obviously this is not the outcome that the agency was hoping for.”
Dozier said the SHRA sees the court ruling as one of the “worst possible scenarios” – and one the legislature never intended.
“There was never any anticipation that over 400 agencies would have to unwind over night,” Dozier said. “It was anticipated that some (agencies) would opt to dissolve, but some would opt to continue activities – which is what we had opted to do.
“I think the severing of the two bills in the court was a huge blow to redevelopment agencies,” Dozier said.
Sacramento projects stalled by the legislation while the courts were sorting things out now come to a screeching halt – including the affordable housing portion of the 65-acre Township 9 project and the remaining phases of the Paso Del Nuevo housing project.
“The issue is that, even if the deadline (to dissolve) is extended (by the legislature), there will be a stay on redevelopment activities,” Dozier said. “I don’t anticipate that they will allow us to move forward on any projects while they are figuring out a new redevelopment plan for the state.”
Now that the decision has been handed down, redevelopment agencies will start the process of dissolving – but leaders at the the California Redevelopment Association (CRA) and League of California Cities said Thursday they aren’t finished fighting yet.
The (California Redevelopment Association) and the league vowed to work with state legislators immediately to develop legislation to revive redevelopment, Kathy Fairbanks, California Redevelopment Association representative, said in a press release Thursday.
Opponents of redevelopment agencies see the court ruling as a step in the right direction for the state and for Sacramento, Mohanna said.
“Our neighborhoods, our schools, our police department and many other governmental agencies will now have more funds to provide essential services for our community,” Mohanna said, “rather than a few select private developers that play the game with redevelopment money.”
Melissa Corker is a staff reporter for The Sacramento Press. Follow her on Twitter @MelissaCorker.