The end of redevelopment has never turned into a cash cow for the state, as Gov. Jerry Brown hoped back in 2011. And while the 2012 cleanup law – AB 1484 – has clarified the rules, cities are still losing most lawsuits against the state that seek to retain former redevelopment funds.
That was the message from three lawyers at the Nossaman law firm who gave an update on redevelopment at the California Chapter, American Planning Association, conference in Anaheim on Monday. Overall, it was a tale that seemed to suggest everyone is getting less than they had hoped for – not only the locals but the state as well.
"The amount of money -- the $1.7 billion that was gonna just come flying in to the state -- has not materialized," Nossaman lawyer Rick Rayl said. "The assets have produced a lot less than anyone ever thought. If you asked Gov. Brown, he might second-guess the whole decision. I don't think it has accomplished what he intended."
AB 1484 created a much more constructive relationship between the successor agencies and the Department of Finance and in particular took the pressure off a possible fire-sale of real estate assets by authorizing successor agencies to prepare long-range property management plans subject to state approval. These plans permit agencies to lay out long-term plans for developing or selling former redevelopment agency assets in a way that will maximize value.
Many cities have complained that DOF turns long-range property management plans are very slowly, but Rayl's colleague Jeff Stava said DOF is actually picking up the pace and getting faster and more responsive to successor agency requests.
Among the other pending issues facing successor agencies:
* Disposition of some 180 lawsuits against DOF – most of which seek to permit the successor agencies to retain former redevelopment funds or real estate assets over DOF's objections. DOF has won most of these cases at the trial court level and the cases are only beginning to trickle up to the appellate courts.
* How to maintain a good credit rating for both the successor agency and the underlying city when $11 billion in redevelopment bonds have been downgraded to junk status. This is especially important as successor agencies begin refinancing bonds – a practice other taxing entities like but, according to Stava, many successor agencies are not motivated to undertake because the underlying city will only receive 15-20% of the benefit.
* Whether and how to spend proceeds from so-called "Mardi Gras" bonds – bonds issued during the hectic period in early 2011 when redevelopment agencies were trying to beat a pending deadline for dissolution. One legislative bill, SB 1129, would actually clarify this issue and allow some of the bond proceeds to be spent.
