San Diego City Council’s move to approve $4.1 billion in redevelopment projects likely won’t be the last word in the battle over Gov. Jerry Brown’s proposal to eliminate the state’s 325 local redevelopment agencies.
Instead, says one legal expert, it could end up being an early salvo in a continuing legal war between communities and the state over the redirecting of tax dollars to plug budgetary holes.
Tony Canzoneri, a real estate and land-use attorney with the Los Angeles law firm McKenna Long & Aldridge LLP, who has worked with public and private partnerships on projects around Southern California, said the feud’s direction will in large part be determined by what ends up being legislated.
A legislative panel has approved a portion of the governor’s plan, in which the state in 2012 would take control of $1.7 billion in unspent redevelopment funds, and then it would send the funds directly to school districts, city and county general funds starting in 2013.
If that comes to pass, says Canzoneri, community advocates might challenge whether the state can do that under the terms of California’s Proposition 22, which prohibits the state from taking funds designated for local uses and sending them to Sacramento.
State Could Challenge Local Rulings
Also, the state could legally challenge moves by cities like San Diego to get certain projects “grandfathered in” to new legislation, by preemptively approving projects in advance — committing money through agreements between cities and their redevelopment agencies — before changes can take effect.
“They’re basically going to do what they think is necessary to position themselves, to be able to handle whatever situation is created by the legislation,” Canzoneri said of the San Diego action. “At this point it can’t hurt.”
The City Council on Feb. 28 approved redevelopment projects impacting the city’s 17 redevelopment districts, which were set to be funded with redevelopment dollars for the next 40 years.
“This should be considered a prudent first step toward preserving the programs that are most important to us,” council President Tony Young said in a phone interview.
Young said those include projects geared to addressing homelessness, removing blight in neighborhoods throughout the city, and improving downtown infrastructure to support future commercial development.
Shortly after council’s action, he said it remained unclear what the state plans to do, and when it will happen. “Right now we don’t know if something is even going to be passed at the state level.”
Council Position Deemed Proper
Kim Kilkenny, the newly named chairman of Centre City Development Corp., the city’s downtown redevelopment agency, said city attorneys have reviewed the move taken by council and have deemed it a proper way to preserve funding and set local priorities for long-range planning.
Those include long-discussed projects such as improvements to the North Embarcadero waterfront district, a new fire station for the city’s west side, park improvements and land acquisitions for future parks that are in the city’s master plan.
Kilkenny said they also include environmental cleanup planned for a 10-acre site in downtown’s East Village, which is currently a city bus yard. That site has also been eyed as a potential location of a proposed new San Diego Chargers football stadium, though officials have said the cleanup will be needed regardless of what goes there.
The Chargers project itself was not among items approved by council. Financing and location of a stadium will hinge largely on the outcome of a public vote currently being planned for 2012.
Kilkenny said the projects protected by council are “all critical” to improving city services and enhancing future funding of local school districts. “The schools alone would see more than $1 billion (over the next 30 years) from the development that is being planned,” he said.
Canzoneri said the amount the state would save by eliminating redevelopment agencies, about $1.7 billion, amounts to a minuscule portion of the $26 billion California budget chasm. In the long run, he said, the state’s move to eliminate the agencies could end up reducing the amount of dollars going to school districts, counties and other entities that benefit from new development.
“It’s a sad state of affairs,” Canzoneri said. “All that this is doing is creating more work for attorneys, when the state should be finding ways to bring people together to figure this out.”