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Redevelopment Supporters Gird for Legal Battle

If Gov. Jerry Brown gets his way in the Legislature in the coming days, he and the state will face a conundrum to make a Zen master's head spin: Is it illegal to transfer funds from agencies that no longer exist?

The governor has thus far been unyielding in his effort to eliminate the state's redevelopment agencies. In doing so he hopes to recoup up to $1.7 billion to help offset the state's estimated $26 billion deficit. Negotiations are ongoing at the Capitol, with a handful of Republican legislators--the so-called "GOP 5"�still in discussions with the Democratic governor. A vote is expected any day now. 

If approved, the governor's budget package would include a June vote on tax extensions; the logistics of that election require the Legislature to vote as soon as possible.   

Meanwhile, a monumental coalition of local officials--representing essentially every locality in the state--led by the California Redevelopment Association and the League of California Cities--has led a vehement lobbying effort to dissuade the governor and legislators from dismantling a system that they say is crucial to the health of local economies and land use planning. If that effort fails, they have made it clear that they will sue to prevent the enactment of the governor's plan. 

"The level of opposition to this proposal�is so strong that we will be following through with legal action," said Chris McKenzie, executive director of the League of California Cities. "Which, I hasten to add, we would prefer not to do." 

The peculiarities of the California legislative process, however, may necessitate just that. 

"It's a crappy system, this war of all against all," said Max Neiman, a senior research fellow at UC Berkeley's Institute of Governmental Studies. "But if that's what the game is, you have no choice but to arm yourself as best you can and duke it out." 

The governor's office contends that such a battle would do little to help the state's dire financial situation. 

"The bigger point is that legal obstruction and obfuscation won't ultimately get us any closer to addressing California's budget deficit," said Evan Westrup, spokesperson for the governor's office.  

CRA and League of Cities officials say that they are on solid legal ground, most notably because of Proposition 22: The Local Taxpayer, Public Safety, and Transportation Protection Act. Prop. 22 passed this November, with 60.7% of the vote. Promoted in response to the state-mandated transfer of over $2 billion in redevelopment funds in fiscal years 2010 and 2011, Prop. 22 prohibits the state from transferring certain local funds, including those dedicated to redevelopment. Advocates of redevelopment say that, contrary to the governor's position, Prop. 22 implicitly forbids the sort of dissolution that the governor is seeking. 

Brown's office, however, maintains that Prop. 22 does not infringe on the Legislature's right to create and disband redevelopment agencies as it sees fit, per Article XVI, Section 16 of the State Constitution. That legislation, originally passed in 1954, establishes redevelopment agencies as creations of the state. 

"Prop 22 limits the Legislature's authority to redirect from redevelopment agencies certain funds. But it doesn't speak about whether or not the Legislature has the authority to end redevelopment," said Marianne O'Malley, director of General Government at the nonpartisan Legislative Analyst's Office.

The League of Cities acknowledges that the Legislature retains ultimate authority over redevelopment. However, McKenzie, insists that neither Art. XVI, Sec. 16 nor any other aspects of the state constitution allows a comprehensive, nearly instantaneous dismantling of the system. 

"They authorized the creation of RDAs, they authorized them to incur obligations. These obligations are substantial; they are tied to the existence of RDAs," said McKenzie. "Eventually if they said they didn't want any more agencies, any more project areas, that's within their discretion.

"They cannot do it overnight in this chaotic, pell-mell way that the governor's proposal envisions."

McKenzie acknowledged that Prop. 22 does not prevent the legislature from enacting traditional reforms such as altering the lifespan of redevelopment project areas or redefine the legal definition of blight. But he maintains that the governor's proposal amounts to a blatant violation of Prop. 22 and, he said, of the voters' intention of securing more funds for local governments. 

The apparent conflict between Prop. 22 -- a constitutional amendment -- and those parts of the constitution that were previously enacted has no clear endgame in California constitutional law. Mary Beth Moylan, a law professor at University of the Pacific's McGeorge School of Law, said that, essentially, there are conflicting precedents that make the outcome of a lawsuit nearly impossible to predict. 

Moylan said that, on the one hand, the more specific statute takes precedence. This principle would favor previous provisions of the constitution. However, she also said that, when constitutional amendments are in conflict, the more recently enacted one takes precedence. 

"Under the �more recent takes prevalence' rule, Prop. 22 is the last statement of constitutional law and so one would think it takes precedence," said Moylan. "Under �specific-versus-general,' it's hard to say."

Moylan noted, however, that if the supporters of redevelopment such as CRA and the League (who also were behind the drafting of Prop. 22) had intended to outlaw the dissolution of redevelopment, they could have explicitly included such language in the proposition. 

"My guess would be that a court if faced with this would try to say, 'Well, the initiative didn't amend Article XVI, so the state still has the power," said Moylan. "If it had wanted to shore up or change or alter the power balance between the state and the local governments in this particular way, it would have changed Article XVI." 

McKenzie said that such a possibility was never discussed. Instead, he said that Prop. 22's prohibition on "indirectly" shifting funds implicitly forbids the wholesale elimination of redevelopment. 

"It could not be clearer because it says it cannot �directly or indirectly' shift these funds to the state or to the local agencies as long as they're needed for redevelopment under Article XVI," said McKenzie. "That was (included) to expressly capture any kind of ruse like this." 

The League's legal strategy also centers on Article XII of the state constitution, which holds that ad valorem real property taxes are to be distributed to districts within the countries from which the taxes are collected. The governor's proposal would, the League contends, distribute some funds to statewide programs such as Medi-Cal and trial courts. 

This debate over the provisions of Prop. 22 amounts to another chapter in the state's tortured history of legislating by ballot initiative. The most recent, high-profile such conflict surrounded Prop. 8, the voter-approved ban on same-sex marriage which was later ruled unconstitutional in a U.S. District Court.  

"Like most voter initiatives, they have these unintended consequences," said Moylan. 

"The problem with making state constitutional law by initiative is that it doesn't look holistically at the constitution."  

Contacts: 

Chris McKenzie, Executive Director, League of California Cities, (916) 658-8200

Marianne O'Malley, Director, General Government, (916) 319-831

Mary-Beth Moylan, Lecturer, University of the Pacific McGeorge School of Law, (916) 739-7223

Max Neiman, Fellow, UC Berkeley Institute for Governmental Studies, (510) 643-6846

Evan Westrup, Spokesperson, Gov. Jerry Brown, (916) 445-4571

 

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