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Redevelopment decision from California's Supreme Court

December 29, 2011 1:11 p.m.


Todd Gloria, San Diego City Councilmember, District 3

Elizabeth Hull, partner, Best, Best and Kreiger, chair Redevelopment & Housing practice group.

Related Story: Calif. High Court Rules State Can Abolish Redevelopment Agencies


This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

ST. JOHN: Is this KPBS Midday Edition. It's Thursday, December 29th. I'm Alison St. John in for Maureen Cavanaugh. The end of 2011 already. Well, it's a subject we've been talking about all year. Ever since California governor, Jerry Brown, suggested dissolving redevelopment agencies to help fund schools. There's been a battle Royale has local governments fought the plan, saying it was illegal, hoping to preserve millions of dollars in property taxes they use for big projects and afford housing. Our guests are Todd Gloria, who represents district three, including golden heights, and Hillcrest. We should mention the mayor is unavailable today, but we're very glad to have you councilman Gloria.

GLORIA: My pleasure

ST. JOHN: Also Elizabeth hull, an attorney who serves as special council to redevelopment agencies throughout Southern California. Thank you for joining us.

HULL: Thanks for having us.

ST. JOHN: And if you have any questions or reactions to this pretty important ruling, 1-888-895-5727 is our number. So councilman Gloria, what was your gut reaction when you heard the ruling this morning?

GLORIA: Well, I was profoundly disappointed and actually quite angry. This was the worst-case scenario for San Diego, and its poorer neighborhoods that have redevelopment. I'm thinking specifically of neighborhoods like City Heights who have utilized redevelopment to turn that neighborhood around, bring in certainly services like a police substation, a library, the first super market, that would not have been possible without redevelopment, and it's unsure how we'll continue to be able to do it without it.

ST. JOHN: And for people who may not quite get why this is so important, it's not just about whether there'll be money for a new stadium, is it?

GLORIA: Not at all. It's not about a stadium in my view. And people in Northpark and City Heights who have used redevelopment, this is about affordable housing, building new infrastructure, and creating jobs. And those are the things that are really on the chopping block because of today's decision. One of our primary sources of funds to create affordable housing is redevelopment. One out of every $5 from redevelopment funds going to affordable housing. Those dollars are now done. And for the 30,000 families that are on our waiting list today in the City of San Diego, their hope for suitable, affordable housing is further away today because of the Supreme Court's decision.

ST. JOHN: So you're angry and surprised or not surprised?

GLORIA: Well, I am surprised to the extent that in 2010, voters approved proposition 22 bite over 60% of the vote. And what that was supposed to do was safeguard those funds to really tell Sacramento that you cannot continue to balance your budget by raiding local funds. We believe this to be a way to preserve redevelopment and other tools we got from Sacramento. Naturally, the disagreed. They have the prerogative to do that. But we question what happened to the will of the voters who said we don't want anymore of this? We want Sacramento to solve its own problems. The not continual he lean on the cities to try to paper over what is the structure 58 budget deficit.

ST. JOHN: And the Supreme Court's ruling is on the websites on the Midday Edition web page, on the KPBS website at, if you're wanting to get a bit of understanding about the background to this. It's a very good ruling 67 it's quite interesting to read. So you can catch it there if you would like. Elizabeth, there were two state laws being challenged hereof. The first basically eliminated redevelopment agencies, and the second said local government could keep property tax money for their projects if they sort of paid a ransom to school districts. Explain what the state Supreme Court ruled on the suit challenging the first law.

HULL: Sure. AB 26, the first law, which is the dissolution bill said that redevelopment agencies were frozen, that they couldn't do anything, couldn't incur new debt, couldn't extend anymore funds, and then solved redevelopment agencies going forward. So you couldn't create a new redevelopment agency unless certain things had occurred, and you couldn't extend anymore funds. There was a successor entity that would take over redevelopment activities, and sort of wind down and close up your redevelopment agencies. It would pay off your debts to yard line bondholders and people like that, but you couldn't incur any new debts. And the state Supreme Court upheld 26 almost in its entirety. There were a few provisions it said were inapplicable because of their ruling. But it basically said that you can't -- that although prop 22 there is there and prop one A, and other provisions to protect local funds, those provisions did not eliminate the legislature's ability to dissolve a redevelopment agency

ST. JOHN: And the second one, which a lot of cities thought would be a compromise measure where you would pay millions of closet, actually toward school, but you could still keep your property taxes or some of them for redevelopment projects. Why did that not fly?

HULL: AB 27 was designed to allow agencies to pay to continue to operate. Of the state Supreme Court found that this violated prop 22. Prop 22, the measure that councilman Gloria referred to was passed to stop the diversion of agency funds to the state. The Supreme Court found that the language in prop 22 prohibited the state legislature from requiring us to make these payments. The state had taken the position that the payments weren't required. They were voluntary. But the Supreme Court found that the sanction of no longer being in existence made it not optional but required. If you want to have a redevelopment agency, you are required to make this payment, not just this year but in every year going forward. And they found that to violate will prop 22.

ST. JOHN: So it's kind offinic, isn't it, councilman Gloria, that prop 22 that seemed like it would protect local government funding, according to this ruling turns out to eliminate one of the possible ways around it.

GLORIA: That's right. And it's one of the unfortunate outcomes of that. But I think it under scores the fact that Sacramento will do whatever it takes to avoid its day of reckoning and to really continue to try to not -- not make difficult decisions like the City of San Diego has to make to resolve our structural budget deficit. For those who may be proud or happy about today's decision. I would caution them. Because we know this does not solve the state's budget problem, and they will be back here again next year looking for something else to paper over their billions of dollars in the deficit. We'll be back here again, it'll just be a different program. And perhaps the program that is near and dear to your heart, if redevelopment is not important to you.

ST. JOHN: 1-888-895-5727 is the number to call if you do have a position on this. And there are different positions on this issue, for sure. It's a big one. Elisabeth. I wanted to ask you is this the end of the legal battle? Is there any place you can appeal it?

HULL: There really isn't any place for us to appeal. Most redevelopment agencies are hopeful that the legislature will step in and solve this problem. CRA, the redevelopment association did not believe that the legislature really intended to dissolve redevelopment agencies. The records from the hearings indicate that many of the members who spoke agreed that changes needed to be made, but total elimination of redevelopment agency probably wasn't in the best interest. But the way the law was written, and the way the Court interpreted it, that's what has occurred. So I think CRA, the California redevelopment association, and local agencies are hopeful that the legislature will step in, and solve this problem and allow us to continue to operate in some form or fashion.

ST. JOHN: Interesting. Okay. Let's take a call here. Michael from Pacific Beach is on the line. Thanks for calling us. Go ahead.

NEW SPEAKER: I just wanted to remind you guys that money for redevelopment was completely wasted. It went right into the hands of developers and if you look -- read through the voice of San Diego on affordable housing units that cost $500,000 a piece. And when you look at, like, the downtown library or the expansion on the Convention Center, or the new stadium, all that money was just put into the hands of the wealthy land developers. Now it's going to go to a real cost, for the kids in the the schools that have been so devastated by the problems that those developers caused

ST. JOHN: OKAY, Michael. Thank you for your call because I think you're expressing the opinion of many people who do feel like schools are more deserving of their property tax dollars. But councilman Gloria, do you have a response to that?

GLORIA: Well, I certainly have heard Michael's point of view from many people, including my constituents but I have to disagree strongly. The fact of the matter is, although there have been excesses; everyone acknowledged that reform was necessary. Will Tony Young created a redevelopment committee that I chair to look at ways that we can make redevelopment look better. The idea was never to end redevelopment but reform it and make it work better for everywhere. While there are examples that have been in the press, I would say look at Northpark. We have the Northpark theatre that for as long as I can remember recall, when I was growing up, it was boarded up. Redevelopment funds reopened that theatre, created an economic engine for that neighborhood, which has created helps of new small businesses up and down the avenue. New jobs, new economic. All that going back to the city's coffers. There are more stories like Northpark than there are of the ones that Michael was pointing out. All the more reason to reform it and not to end it.

ST. JOHN: And as you point out, it was a big job creator.

GLORIA: Look at our skyline today in downtown. Where the project, the cranes are, whether it's the world trade center, creating our homeless services center, our central library, where I understand there's about a thousand people at work today, where there is economic activity, there are redevelopment dollars there. Those are jobs that is economic activity. And we need so desperately in our city right now.

ST. JOHN: 1-888-895-5727. We're talking about the decision that came down from the California Supreme Court just two hours ago about redevelopment agencies. They have been eliminated. Serena from San Diego, you've got the big question of the day. Go ahead.

NEW SPEAKER: Thank you very much for taking my call. Yes, my question is regarding the late-night plan that was put together by Nathan Fletcher, Jerry Sanders, and was signed by governor Schwarzenegger as he was leaving last December 31st to continue redevelopment for San Diego, and that was all coddled together under the dark of night. And so how does this impact on that? I think mayor Sanders wanted that money for the new football stadium. And I'll listen off the air. Thank you.

ST. JOHN: Thank you, Serena. Councilman Gloria? Why don't you catch that one?

GLORIA: Well, I'll try. That certainly, I think raised redevelopment on the radar screen. And as the new governor came into office, struggling upon ways to balance the state budget, redevelopment, you know, has already -- a somewhat bad reputation. But at the end of the day, this is about reforming it, not ending it. The committee I chaired has looked at how is it we have had such amazing success in downtown, and how can we replicate that in neighborhoods like San Ysidro, Barrio Logan, City Heights where we have yet to see all the economic activity that we hope for? The question has now been answered by the Supreme Court, and unfortunately all those neighborhoods no longer have redevelopment, which will be critical to try to invest in those neighborhoods. I hear what the caller is saying. I think it raised it on the politicians' radar screen and part of probably why we're where we're the where we are today.

ST. JOHN: A lot of listeners are wondering, what does this mean for the stadium, for example? Elizabeth, you've worked for CCDC. Does this have a big affect on the funding for the possibility of a stadium? I know that's not the only thing. It's just one of the projects that the public sort of is pretty interested in in

HULL: I think it does have an impact on all of the projects that CCDC, and the other redevelopment areas in San Diego were looking to proceed with. Thes projects. They aren't going to have a funding source going forward to the extend that there were agency dollars going into them. Agency dollars are used to eliminate light, and to do public improvements. So streets, gutters sewers, fire stations, park, and affordable housing. Those funds are not longer going to be available because those tax increment funds that were going to the agency and CCDC are now going to be diverted to other taxing entities, those funds will no longer be available to assist in the development of a stadium or other projects that the city and the agencies were looking to pursue.

ST. JOHN: Right. And there are projects all over the county, like the ballpark up in Escondido. Affordable housing, a huge, why. These are all issues that we'll be exploring on KPBS in the following week. Let's go to another caller right now. Midge from La Mesa. What's your comment?


ST. JOHN: Yes, you are.

NEW SPEAKER: Okay. Yes, I'm listening and hearing so many different things including the fact that there were huge scandals with the people running these redevelopment agencies. There were the two main ones. And I thought at the time, oh, for sure they'll probably eliminate these agencies because of the amount of money going into them, the amount of money wasted with these people. And the scandals and I kept thinking, why doesn't each counsel person control a development or pursue the development in their area? Why do we have to have a whole separate entity when we've worked for many years and gotten so far? What is the deal that we have to pay huge salaries to people who turn out to cheat us and take our tax money, and then besides that, the huge salaries go onto all kinds of redevelopment things, including lower housing, more hours for libraries.

ST. JOHN: And schools, yes, thank you so much for that question. That's on a lot of people's minds. Councilman Gloria, the city has done a lot already to reform some of what make was talking about,; isn't that right?

GLORIA: Well, we have. The individuals I think she's referring to were all terminated am most of those organizations have had their by laws and separating agreements updated to reflect additional oversight, and corrective reform. We were looking to do more, naturally. But I think her question was why can't we individual she go out and invite investment into our distribute. And I have to tell you, I do that all the time. I represent and am proud to represent two project areas, Northpark and City Heights, and I have to say that it's the tools of redevelopment that allow me to make those of interest to people who want to create jobs. So whether it's helping to assemble plots of land, helping to supply the infrastructure the city is responsible for, that can guarantee that a new housing project or commercial development that creates jobs can go in there, those are the kinds of things that I will do, regardless of whether or not redevelopment exists. But they are additional tools that I have to close those deals. To get people to come in and create the jobs to to remove the blight. And without those tools it makes my job significantly harder. We're going to try to find other ways to invite that investment

ST. JOHN: Thank you so much. We've got a lot more to talk about, including how this might affect schools, but I'd like to thank our guests. City Council man from San Diego, Todd Gloria.

GLORIA: Thank you.

ST. JOHN: Thank you for being with us. And Elizabeth Hull, an attorney who's shed some light on the legal implications of this important decision

HULL: Thank you.