California Cities Go Ballistic Over Latest Redevelopment Law

In its attempt to clean up the mess left by the dismantling of the state's redevelopment agencies, the California legislature is holding cities hostage with a 'draconian' penalty for failing to relinquish funds to the state.
July 19, 2012, 11am PDT | Josh Stephens | @jrstephens310
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Josh Stephens reports on Assembly Bill 1484, "a budget trailer bill meant to clarify aspects of the dissolution of redevelopment agencies and liquidation of their assets," that was signed into law last week by Gov. Jerry Brown.

While the upsides of the bill are substantial - it "salvages billions of dollars worth of bond funds, protects certain loans between cities and former redevelopment agencies, and gives cities a degree of control over bond proceeds and properties owned by former redevelopment agencies" - the secretive process by which it was drafted and approved, and a controversial "claw-back" provision are raising objections.

"For some, however, AB 1484 is a Trojan horse, which essentially gives the Department of Finance the key to cities' coffers. AB 1484 requires that, as of July 12, cities relinquish local taxing entities' share of the 2011 property tax distribution that had gone to redevelopment/successor agencies. Cities that did not make full pass-through payments to their respective taxing entities were required to make up the difference. "

"The claw-back ties the fate of redevelopment agencies to that of their host cities in new, powerful ways. Redevelopment agencies had been wholly separate entities from their host cities, and the vast majority of host cities agreed to serve as successor agencies only because AB 1X 26 treated successor agencies as separate legal and financial entities. AB 1484 changes that relationship by forcing cities to pay assessments from their own tax bases."

Thanks to Josh Stephens

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Published on Thursday, July 19, 2012 in California Planning & Development Report
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