State Government Confident it Can Kill Redevelopment Agencies, Including Novato's

A spokesman for the state government said officials are confident a new lawsuit will not derail a state budget measure that will eliminate or reshape local redevelopment agencies.

"We are confident the measure is legally sound," state Finance Department spokesman H.D. Palmer said Tuesday.

The lawsuit will determine the fate of the Novato Redevelopment Agency, which has orchestrated such projects as the transition of Hamilton Field Air Force Base from military to residential, the construction of Vintage Oaks shopping center, the revamping of Grant Avenue’s Old Town area and efforts to prevent homelessness. what will happen with the lawsuit.

The suit was filed Monday in the California Supreme Court by the League of California Cities, the California Redevelopment Association and the cities of San Jose and Union City. It claims the measure enacted by the Legislature violates Proposition 22, a state constitutional amendment enacted by voters last year to protect local tax revenues from being seized by the state.

League of California Cities Executive Director Chris McKenzie said, "The governor and legislature have blatantly ignored the voters and violated the state Constitution. We must now go to the Supreme Court to uphold the voters' will."

The measure, part of an austerity plan to close a multibillion-dollar state budget deficit, would eliminate California's nearly 400 city and county redevelopment agencies by Oct. 1.

An agency could be reestablished only if it agrees to give up its share of $1.7 billion in property tax funding in the current fiscal year and $400 million in future years. The funds are additional tax revenues, or increments, attributed to redevelopment projects.

California Redevelopment Association Executive Director John Shirey called the required contributions "a ransom payment."

The lawsuit says the plan violates Proposition 22, which prohibits the state government from seizing or transferring revenues that are intended to pay for services provided by local governments.

The lawsuit asks the state high court to issue a stay suspending all or parts of the measure by Aug. 15.

Palmer said the state contends the Legislature has the power to eliminate redevelopment agencies because it created them.

"Redevelopment agencies were created by an act of the Legislature in 1945, and they can be dissolved by the Legislature," Palmer said.

The spokesman said the state maintains the measure does not violate Proposition 22 because it merely requires reconstituted agencies to pay contributions for school, fire and transit districts, but does not say those payments have to come from property tax increments.              

— Bay City News Service