Redevelopment Agencies Face Closure In Supreme Court Ruling

In a move that Loma Linda officials said will “stop many capital improvement projects in the city,” the California Supreme Court decided Thursday morning that the state has a right to seize more than $1 billion in redevelopment agency funds, putting about 400 redevelopment agencies in jeopardy.

The justices also struck down a separate law that would have allowed redevelopment agencies to fund local projects if they paid a portion of tax revenue to the state.

Earlier this year, the Legislature passed two laws – AB26, which allowed for the complete closure of redevelopment agencies and AB27, which would allow redevelopment agencies to function if they paid the tax revenue portion.

Loma Linda City Manager T Jarb Thaipejr said he is “very disappointed” in the decision and there are many questions as to what the city can and can’t do in fighting the decision. He said not only does the city lose revenue, but it will halt some projects and have an impact on the affordable housing project set to begin in 2012.

Of particular concern is some storm drain projects that were slated to begin in 2012. Following the flooding in December 2010, which cost the city more than $1 million in damages, the city looked to update all means of flood control. Thaipejr said this project could be delayed or even shelved.

But because Loma Linda has always prided itself as being fiscally conservative, Thaipejr said the city will be in better shape than many larger cities in the county and state.

“Luckily, we’re a small agency and don’t depend on a lot of RDA money,” Thaipejr said. “We’ll be OK. We just don’t do those projects, that’s all.

“The city philosophy is to live within our own means and we have always been conservative with staffing levels and spending and our overhead is always kind of low. Our RDA money has always been set aside primarily for projects and little else.”

On July 26, Loma Linda’s City Council approved a non-binding resolution declaring its intent to participate in a state-designed program that allows cities to keep their redevelopment agencies.

But they made it known they feel they are being forced to make ransom payments.

City officials estimated it would cost $2.839 million a year to keep their redevelopment under AB 1x27

Loma Linda has been closely following the petition from the state, filed in mid-July. The suit challenges AB 1x26, which eliminates the agencies in their current form, and AB 1x27, which allows their RDA to exist as long as the city pays into a fund that would be used for the state’s educational system, state officials said.

Supporters of redevelopment agencies have said that earlier rulings were in violation of the voter approved Proposition 22. in the fight to save redevelopment funds.

On Jan. 15, half of redevelopment funds are expected to be turned over to the state for the 2011-2012 fiscal year.

The ruling will force city officials and the community to find alternative means to fund local projects originally funded through its community redevelopment agency.