Here's reaction from Bay Area cities to the California Supreme Court ruling Thursday that state lawmakers have a legal right to seize $1.7 billion in redevelopment money to help solve the state's budget woes ruling:
"It's going to be a disaster for the city, especially because of how we use it for low-income housing and other projects," said Antioch councilman Gary Agopian. The cash-strapped East Contra Costa city, which has already dramatically reduced service and employees, will have to make more cuts to its general fund, he said.
"Obviously we are not pleased with this outcome and will be further evaluating the court decision to see what the exact impacts will be to the city," Brentwood City Manager Paul Eldredge wrote in an email. " We have been taking certain actions to minimize the impact, however, it has been a moving target at best."
Brentwood Mayor Bob Taylor said: "This is a huge disappointment to many cities that have relied on these funds for the betterment of our citizens within those redevelopment zones," said
For some time now, the city of Campbell has been preparing for the loss of its RDA.
"We're not surprised about the outcome," said interim city manager Al Bito of the Supreme Court's decision.
He added that although there was hope the decision would be reversed, Campbell was expecting the worst.
"Our city has budgeted conservatively in the last several months. We erred on the side of losing the case," Bito said.
Losing its RDA translates to an annual hit of about $500,000 to Campbell's budget. And while no current projects will be affected, mayor Mike Kotowski is sad to see the agency go.
Kotowski was serving on the city council when Campbell's RDA was first incorporated, and is now at the head of the council as the agency is being dissolved.
"It's spooky," he says of the timing.
"This continues and unfortunately legitimizes the ongoing swiping of local tax dollars by Sacramento to balance their budgets at the expense of local communities," Concord Councilwoman Laura Hoffmeister said.
Contra Costa County
"This will be devastating to local government," Contra Costa County Assessor Gus Kramer said. "Redevelopment is the last vestige of keeping local taxes local. It's a sad day for California."
"The League of Cities' confrontational strategy didn't work," said Contra Costa County Supervisor John Gioia of Richmond. "Not only did the court rule that Proposition 22 didn't prevent the state from doing away with redevelopment agencies, ironically, it also ruled that Prop. 22 prevented the "compromise" approach taken by the governor and Legislature. They sure got slapped down."
"I'm a little disappointed with the decision," said Gilbert Wong, Cupertino City Councilman and member of the League of California Cities Board of Directors. "But we had to protect taxpayer money from a state that cannot balance their own budget." Cupertino currently operates with a balanced budget and city staff has stated over the year that the budget is projected to be balanced for an additional five years.
"We did a really good job of balancing our budget and the state has to steal money from cities? That is just not fair," Wong added.
The city's redevelopment agency financed public improvements and administrative programs in the Vallco part of town, near Stevens Creek Boulevard and N. Wolfe Road. In August, the city council voted 4-1 to "opt-in" to the Voluntary Alternative Redevelopment Program.
The decision is disappointing, but will not put a direct halt to any projects in Danville, said Mayor Candace Andersen.
"The voters were very clear when Proposition 22 was passed that they wanted to protect local government from raids from the state," Andersen said.
"I think it's a huge blow for economic development for all cities, including Fremont, unless the Legislature comes up with another mechanism for affordable housing and redevelopment," Fremont Vice Mayor Anu Natarajan said.
"Today's ruling by the California Supreme Court validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety," Gov. Jerry Brown said in a news release.
Hercules' redevelopment agency lacked the cash to make the state payment and keep redevelopment anyway so the city has taken title to its land in exchange for repayment of loans. It's unknown if the state will attempt to wrest that land away from the city to settle the agency's other debts.
Either way, "it's hard for me to understand how our Supreme Court can say it's OK for the state to balance its budget on the backs of the cities," said Hercules Mayor Dan Romero. "It's hard for the common person to understand how the judges could say this is fair."
"What's really unfortunate is that the redevelopment agencies were really the fuel in the economic engine that was going to turn around this recession," said Livermore Mayor John Marchand, calling it the worst possible news for cities. "Our redevelopment agency has created hundreds of jobs over the last few years, and to gut a proven economic engine is just shortsighted."
The decision also means the city's proposed regional theater may never be built, Marchand said.
"This could have devastating effects on whether that project can ever move forward," Marchand said.
Oakland Mayor Jean Quan said she expected state lawmakers to pass legislation preserving many aspects of redevelopment.
If that doesn't happen, Thursday's decision could butcher Oakland's bottom line. Redevelopment this year paid for 171 staff positions, including 17 police officers and nearly 100 employees with the city's Community and Economic Development Agency.
"Unless there is a fix at the state level, many employees will be laid off and there will have to be a serious adjustment of many departments' budgets," Councilmember Jane Bruner said.
Losing redevelopment also could imperil efforts to build a new stadium for the A's near Jack London Square where redevelopment funds were anticipated for buying land and relocating businesses.
With redevelopment areas covering nearly half of the city, Oakland was prepared to send the state an extra $40 million a year to keep a redevelopment program that has annually generated more than $130 million.
"We'll probably have to reopen the budget and see how the basic services we need to provide are protected," Councilmember Ignacio De La Fuente said.
"Our team is diving into the specifics, but it is not good news," Oakley City Manager Bryan Montgomery said in an email. "The State has chosen to try and fix its budget woes by harming cities and counties -- it is not right, even if the court calls it legal."
Palo Alto Mayor Sid Espinosa said the ruling would have "very little, if any impact" on the city.
Espinosa said the city has paid the minimum amount to keep its redevelopment agency intact, because it would be more expensive to create one from scratch in the event one was needed.
"We have had a redevelopment agency in large part as a place holder," he said. "But the truth is there are no parts of Palo Alto that are blighted, so it doesn't have a significant impact on the city." While the ruling may have killed redevelopment agencies, the reasons why many of them existed in the first place remain, Espinosa said.
"In Sacramento, there will need to be a broader conversation about the real intent of redevelopment associations and what policy issues they sought to address," he said.
State lawmakers "thought it out for their side where they get the cash, the $1.7 billion they need to balance their budget, but they didn't give us a choice," Pittsburg Mayor Ben Johnson said. "We had zero choice. They're taking our authority away. Every time you turn around they're doing something that circumvents what we can do as local government, and that's really frustrating to me as an individual."
In Richmond, where property tax receipts for redevelopment were $18 million this year, the ruling could throw off plans for new public housing.
Steve Duran, who stepped down as economic development director for Richmond in October, said that all of the city's current redevelopment projects such as the BART garage and Marina Bay railroad undercrossing are fully funded. But the city also had some housing projects on the drawing board that may now have to wait.
San Jose Mayor Chuck Reed called the ruling a blow to "job creation efforts in San Jose at the worst possible time."
"Today's Supreme Court decision eliminates critical tools to rebuild our economy, create jobs and revitalize neighborhoods -- exactly the kinds of investments California cities should be making in this recession," he said in a statement released by the city.
"The elimination of redevelopment agencies marks a further shift of our property tax dollars away from local communities to the control of Sacramento, and will likely result in a new round of budget cuts by cities without any guarantee Sacramento will use the funds wisely," San Leandro Mayor Stephen Cassidy said in a statement.
San Mateo City Councilman Jack Matthews said the court's decision threatens not only redevelopment projects but city jobs that are funded with redevelopment money.
"This is really a difficult blow," Matthew said. "I have a lot of questions and not a lot of answers."
Among Matthews' questions: What happens with outstanding loans the San Mateo Redevelopment Agency made to finance affordable housing projects? Does the state take them over? And what happens to agency-owned properties that have yet to be developed? Will they be liquidated and the money turned over to Sacramento?
Matthews said it's now up to the Legislature to create another vehicle to support the creation of affordable housing.
"I'm OK with reforming redevelopment agencies, but getting rid of them altogether without having something to take their place is bad policy," he said, adding, "This is not the solution to the state's budget problems."
Also threatened, Matthews said, is the site of the former police station at 2000 S. Delaware St. The Redevelopment Agency purchased it for $6.3 million in 2007. It is slated to be developed into 120-unit residential complex, with roughly half the units designated as affordable housing.
"Today's State Supreme Court ruling was a serious impediment to economic recovery during an umprecedented economic recession, and essentially eliminated local government's only available tool to create jobs to improve communities, such as San Pablo with a 22.4 percent unemployment rate," said Matt Rodriguez, San Pablo city manager.
"San Pablo is evaluating this decision and vows to work with State legislators to introduce legislation that will reinstitute and protect redevelopment in California. Our General Fund Operating budget simply cannot match the cumulative benefits from our redevelopment agency efforts over the last 15-20 years in San Pablo to stimulate growth and build public infrastructure to combat the impacts of socio-economic issues that plagues our community.
"With staggering high poverty and low income rates, redevelopment is too vital for San Pablo's future to give up without a fight."
"This is devastating and disappointing," said Santa Clara Mayor Jamie Matthews. "We had hoped and prayed that this wouldn't be the decision. This is the worst case scenario."
Not only is up to $40 million of redevelopment money at stake for a new 49ers stadium to be built in Santa Clara, but Matthews said there are many more projects "in the queue," especially for building more affordable housing, that could be affected. "We just have to hunker down," he said, "and look at all our possibilities."
Not everyone was upset with the ruling, though.
"The RDA has taken money from our schools for so many years," said Michele Ryan, a San Jose school teacher and chair of Santa Clara Plays Fair, a group that opposes taxpayer money supporting the stadium. "We don't want property tax dollars benefitting a private corporation. We've always felt this project is a real problem. In that respect, we support this decision."
Chris Koltermann, a Santa Clara Unified School District trustee, also was elated with the news. This means, she said, that the school district will still have a $6.6 million shortfall next year, but "at least it will be $3 million less'' now that the state won the redevelopment lawsuit. "I'm really happy," she said.
In Sunnyvale, where a year-end report showed an unexpected boost in revenues that added an extra $7.8 million to the city's coffers, city officials set aside $3.7 million of that money to make its opt-in payment to the state in January. The court's ruling, however, wasn't what city officials had anticipated.
"There's been a lot of disappointment and a little bit of shock; this was the worst possible outcome," said Grace Leung, Sunnyvale's finance director.
Sunnyvale's main fiscal challenge going forward, Leung said, will be the redevelopment agency's loan repayment back to the city's general fund. The agency owes $140 million over a 20-year period, with $6 million due for fiscal year 2011-12.
The ruling also comes at a time when Sunnyvale's downtown sector is finally primed for construction activity. The Town and Country site received a couple of construction approvals this year, while the city has reached a development agreement on the idle Town Center project, Leung said.
"Timing wise, this is bad because of all the activity happening downtown; that was what was going to generate all that tax revenue to the city," she said. "This is a pretty hard hit to the city that we're going to have to figure out."
The court's ruling should not impact the Town and Country projects nor break the Town Center agreement, which is a "valid and viable project," Leung said. "But what's unfortunate is redevelopment is a tool to help finance projects that can't be started, and this takes away our tool to do that. That, for us, is the biggest hit."
"The last 10 years, the Union City Council has invested almost all of its redevelopment dollars in the station district, and that's going to come back and benefit the community as a whole, and the region," Redevelopment Agency Manager Mark Evanoff said.
Bay Area News Group reporters Casey Jay, Matthew Artz, Paul Thissen, Aaron Kinney, Howard Mintz, Lisa Fernandez, Chris Vongsarath and Lisa Vorderbrueggen contributed to this report.