Your eyes on California Government

DEC. 29, 2011

By STEVEN GREENHUT

Believers in property rights and limited government should be thrilled that when the toughest threat to redevelopment arose in California, the biggest defenders of these agencies — the League of California Cities and the California Redevelopment Association — weren’t up to the task of saving these horrible agencies. It was clear that redevelopment — the big-government, urban-renewal project that was ended today in a wonderful California Supreme Court ruling — was in big trouble when the CRA’s long-time leader, John Shirey, bailed out and became city manager of Sacramento, well before the state court issued its ground-breaking ruling. Ironically, it was the strategy pursued by these redevelopment supporters that led to the agencies’ demise. The result couldn’t be sweeter.

As I wrote in February, “If California Redevelopment Association President Linda Barton’s presentation Tuesday at a Sacramento Press Club debate was any indication, then Gov. Jerry Brown might have an easier time than expected in getting rid of the state’s noxious redevelopment agencies. Barton was so out of her league it was almost embarrassing as she debated longtime redevelopment foe, Chris Norby, now an Assemblyman representing north Orange County.” Redevelopment officials resorted to distortions that were easily debunked by the Legislative Analyst’s Office and, ultimately, to an embarrassingly flawed legal strategy. When push came to shove, the RDA house of cards simply crumbled.

The best example of the failure of redevelopment’s leadership can be found in the California Supreme Court decision itself, which used the policy of the CRA’s own making, Prop. 22, to give these agencies the final death knell. After Gov. Arnold Schwarzenegger — at the urging of Republican Assemblyman Norby, tried to divert redevelopment funds to the state general fund, the leadership of CRA and the League crafted Prop. 22 (November 2010). The initiative, per its summary, “prohibits the state from borrowing or taking funds used for transportation, redevelopment, or local government projects and services.” It was a constitutional amendment.

The measure was sold to the public as a protection of local transportation funds from Sacramento raids, but that was dishonest. The measure was designed to protect redevelopment funds. It passed and its defenders were gloating. They viewed redevelopment as permanent and untouchable.

But arrogance has its cost. To get around the ban on diverting redevelopment funds, Gov. Brown signed into law ABx1 26, which ended redevelopment agencies. His argument: It was no diversion if the agencies are shut down, and because RDAs are technically state agencies, the state has the full authority to shut them down. But the state’s Democratic leaders were really only after the money. As advocates for urban renewal, they had no real beef with these agencies, even though they routinely destroyed the lives of small business owners by abusing eminent domain and over-regulating land use within redevelopment project areas.

So as a sop to the agencies, the governor also signed into law ABx1 27, which allowed the agencies to come back to life provided they paid what the CRA and League called “ransom.” The governor should have vetoed that bill, but we know his political perspective. The redevelopers could have a) accepted that they would be losing money and just gone on with their lives; or b) challenged the bill ending redevelopment and left it at that.

But they challenged both laws, a strategy borne of overreach and arrogance, and one that misunderstood the current political and legal realities. The state high court agreed with Brown on the first law:

“Assembly Bill 1X 26, the dissolution measure, is a proper exercise of the legislative power vested in the Legislature by the state Constitution. That power includes the authority to create entities, such as redevelopment agencies, to carry out the state‘s ends and the corollary power to dissolve those same entities when the Legislature deems it necessary and proper. Proposition 22, while it amended the state Constitution to impose new limits on the Legislature‘s fiscal powers, neither explicitly nor implicitly rescinded the Legislature‘s power to dissolve redevelopment agencies. Nor does article XVI, section 16 of the state Constitution, which authorizes the allocation of property tax revenues to redevelopment agencies, impair that power. …if a political entity has been created by the Legislature, it can be dissolved by the Legislature, barring some specific constitutional obstacle to a particular exercise of the legislative power. The assertion in Proposition 22, section 9 that tax increment allocations to redevelopment agencies are constitutionally mandated, rather than constitutionally authorized and statutorily mandated, is a clear misstatement of the law as it stood prior to the passage of Proposition 22. Moreover, section 9 of Proposition 22 does not purport to amend article XVI, section 16 or to change existing law concerning the source of redevelopment agencies‘ entitlement, if any, to tax increment.¹³ Accordingly, we decline to treat its immaterial misstatement of law as a basis for silently amending the state Constitution. (I added the underlining)· The Association‘s alternate constitutional argument rests on article XIII, section 25.5, subdivision (a)(7) of the state Constitution, added in 2010 by Proposition 22. Examining both the text and the various ballot arguments in support of and against that initiative, we find nothing in them that would limit the Legislature‘s plenary authority over the existence vel non of redevelopment agencies….Proposition 22 contains no express language constitutionalizing redevelopment agencies.”

That’s good and proper, but here’s where the ruling is really sweet. Critics of redevelopment such as myself were thrilled about the ending of redevelopment agencies, but we saw that these agencies were mostly paying up and coming back into existence. It was annoying and costly to them, but the corporate welfare types and urban renewal bureaucrats were not going anywhere. Then the California Supremes ruled that because of Prop. 22 — the initiative that redevelopment’s advocates foisted on the state — AB1x 27 was no longer valid. Prop. 22 halted these so-called ransom payments, so 27 was dead — the best of all worlds for those of us who want to put a dagger in the heart of RDAs. Here is the court:

“A different conclusion is required with respect to Assembly Bill 1X 27, the measure conditioning further redevelopment agency operations on additional payments by an agency‘s community sponsors to state funds benefiting schools and special districts. Proposition 22 (specifically Cal. Const., art. XIII, § 25.5, subd. (a)(7)) expressly forbids the Legislature from requiring such payments. Matosantos‘s argument that the payments are valid because technically voluntary cannot be reconciled with the fact that the payments are a requirement of continued operation. Because the flawed provisions of Assembly Bill 1X 27 are not severable from other parts of that measure, the measure is invalid in its entirety. Assembly Bill 1X 27 on its face imposes not an optional condition but an absolute requirement: going forward, every redevelopment agency must have its community sponsor annually pay the portion of its tax increment assessed by the state under Assembly Bill 1X 27. … A condition that must be satisfied in order for any redevelopment agency to operate is not an option but a requirement.²³ Such absolute requirements Proposition 22 forbids. (See Cal. Const., art. XIII, § 25.5, subd. (a)(7)(A).)”

The CRA, the League of California Cities and the foolhardy Republicans, such as Sen. Bob Huff were outsmarted. (CORRECTION: I talked to Huff and although he supported Prop. 22 early on, he later opposed it because he thought it was too tightly worded and could lead to the kind of outcome we saw last week.) They were so arrogant that they tripped over their own clever plans. They passed Prop. 22, which then forbade the one mechanism that would have saved redevelopment from the ash bin of history.

There are many villains, beyond Barton and Shirey — the League’s Chris McKenzie springs to mind. Here’s his statement after the court agreed to take the case:

“We’re very gratified that the California Supreme Court has agreed to take our case, issued the stay we requested to preserve the status quo, and that it is moving forward on an expedited basis. The redevelopment bills are unconstitutional, violating Proposition 22 and other provisions of the state constitution. We look forward to presenting our case to the court very soon. We’re confident the state Supreme Court will ultimately strike down this unconstitutional legislation that ignores the voters’ will and that will destroy local economies.”

The vote wasn’t even close — 7-0 on the first part and 6-1 on the second. Most Republicans in the Legislature look foolish now, as they argued that redevelopment cannot constitutionally be eliminated. They used their power to try to protect the corporate welfare program in defiance of their limited-government rhetoric, and now the public knows that these folks are not their allies on most issues. But why waste our times on these folks?

There are many heroes, who labored for years to end this travesty not only for financial reasons but for reasons of justice. As someone who covered redevelopment for many years, I saw how these agencies engaged in unethical practices and basically stole people’s land in order to benefit rich developers, who provided political support for the elected officials who supported this process. I watched redevelopment destroy lives and undermine the fabric of cities — not to mention run up huge amounts of debt. Some people saw this and devoted themselves to fighting for this cause.

Norby is perhaps the biggest hero in the state. He started groups devoted to fighting redevelopment. He planted the seed of destruction in the mind of two governors, and he never gave in to pressure from fellow Republicans to save these agencies.

Philanthropist Howard Ahmanson is best known in the liberal media for funding religious-right causes, but one of Ahmanson’s biggest interests for years was fighting redevelopment, for reasons of faith and justice. He supported two other heroes, Assemblywoman Beth Gaines and her husband, Sen. Ted Gaines, who both defied their parties and voted with the Democrats to end redevelopment.

I’ve known many activists and lawyers who have fought for years against this travesty, people including Fullerton Councilman Bruce Whitaker, Tony Bushala, Chris Sutton, Larry Gilbert, Les Poppa, Allan Pilger, Bob Ferguson, Moe Mohanna and on and on. People who tasted the bitter sting of redevelopment often pledged their lives to fight it. Here, finally, we see a good news story, a triumph of justice in a state with few such victories.

I can’t end without tipping my hat to Gov. Jerry Brown and the Democratic Legislature. I almost never agree with anything they do, of course. And I don’t for one minute argue that the state’s Democrats ended redevelopment because of any concern for property owners or property rights. But they did indeed do the right thing. They stuck with it. I don’t believe that we would have this great victory had the eminent-domain-supporting Meg Whitman become governor. Brown’s analysis of redevelopment did indeed show a remarkable understanding of more than the fiscal problems with it. This victory makes many of his other bad policies almost tolerable.

Ultimately, Brown is the hero here and it’s sad the Republicans didn’t join with him. When your political foe gives you a gift, you ought to take it, but the GOP was too short-sighted to do so.

Sure, there will be new efforts to craft new types of agencies, but I can’t see where the money will come from. There are no permanent victories in politics, but this is a big one. There are no federal issues here, so this can’t be appealed to the federal courts. It’s a big win for Californians. Many of us view California’s future as sadly bleak. Gov. Brown insisted that he is not a “declinist,” that California is not in decline, but he is wrong. All the indicators are bad, except perhaps for this one. So we close 2011 on a happy and surprising note. Maybe we’ll have many more pleasant surprises for 2012.