Special City Council Meeting to Decide on Redevelopment Agency Successor

A special city council meeting is set for Tuesday at 5 p.m. to decide if the city should become the successor agency to the soon-to-be dissolved redevelopment agency, which was struck down in a California Supreme Court decision on Dec. 29.

The Supreme Court upheld and affirmed the State's decision to dissolve redevelopment agencies in the state. The dissolution is set for Feb. 1.

In so doing, the court found in favor of Assembly Bill 1X 26 signed into law by Governor Jerry Brown in June 2011, but struck down Assembly Bill 1X 27 that would have allowed the agencies to operate by paying dues to the state.

"We've always contended that redevelopment agencies could be dissolved by an act of the legislature and given the fiscal crisis that California has been facing, we believe that other areas have more priority for these property tax dollars," said H.D. Palmer, Deputy Director for External Affairs at the California Department of Finance, on KQED on Dec. 30. "And a priority is K-12 education."

According to Santa Clara County property tax records, in 2011-2012 Cupertino’s redevelopment agency diverted $205,825 in property taxes from Cupertino Union School District and $138,999 from Fremont Union High School District, as well as $199,552 from the city’s general coffers and an additional $35,862 from Cupertino Library.

The funds were largely targeted to support the lackluster .

The elimination of the agencies also puts in motion the repayment of debt obligations. In preparation, Cupertino’s city staff is recommending the city become the successor agency to recover $250,000 per year out of the revenues lost because of the redevelopment agency’s elimination. The city must also decide if it wants to become the successor housing agency, which performs affordable housing activities, but there’s a chance the state may revisit the activities related to housing, said Cupertino City spokesman Rick Kitson.

“The dust hasn’t settled completely, nor have all the legal issues,” he said.

Property taxes funded the redevelopment agencies. Now the legislature will redistribute the $1.7 billion in RDA funds to other state agencies, including the schools. The amount owed per city will differ based on the size of the agency, state officials said.

Across the state, reactions have been swift. The California Redevelopment Association and the League of California Cities vow to work with state legislators to revive the agencies they said protect job creation and local economies.

"Without immediate legislative action to fix this adverse decision, this ruling is a tremendous blow to local job creation and economic advancement," said CRA Board President Julio Fuentes. "The legislative record is abundantly clear that Legislators did not intend to abolish redevelopment. We hope to work with state lawmakers to come up with a way to restore redevelopment."

In July 2011, CRA and the League of California Cities filed suit to enjoin Governor Brown's bill to eliminate redevelopment from communities.

Brown originally proposed the elimination of redevelopment agencies in 2010, but was voted down. The State Legislature reintroduced the bill with a proposed second option asking cities to pay the state in order to remain operational.

The California Supreme Court found the state government's request to redirect those property taxes unconstitutional and shot down AB27 request.

"I've seen firsthand the benefit of redevelopment in my district,” said Assemblyman Luis Alejo. “When I voted for the budget last June, I did so with the intent that redevelopment agencies in my district and throughout the state would continue to operate, continue to produce jobs and boost local economies 

"Today's ruling essentially kills redevelopment and I plan to start off 2012 by collaborating with my colleagues to restore redevelopment," Alejo said. "We need it in California."

The next legislative session begins in four days, and supporters of redevelopment agencies hope to have this decision reversed.

"CRA is ready and willing to engage in immediate dialogue with Legislators and the Governor on a meaningful 'fix' to this problem," said Interim Executive Director Jim Kennedy. "We have ideas for ways to restore redevelopment while also providing the state budgetary relief in a manner that doesn't violate Prop 22.

"Time is of the essence, and the future of California's economy is at stake," Kennedy said. "We hope legislators will join us in this important effort, for the sake of our future."

Tuesday’s special meeting, which is open for public input, will be held at Community Hall. It will be broadcast live on Cupertino Radio 1670 AM, as well as webcast.