[Editor’s Note: Mr. Rice is a lobbyist for City Hall.]
See pdf below
Dateline Sacramento — While there have been policy committees meeting this week to dispense with, the bills that must be passed out of their house of origin prior to the end of the month, the vast majority of legislative action, both public and private, has been centered on the budget and the fate of redevelopment.
Redevelopment
Some legislators are rallying behind SB 659 to provide a temporary reprieve for local redevelopment agencies from the Feb. 1 dissolution date that is rapidly approaching. Barring mitigating legislative actions, all Redevelopment Agencies in the state must effectively shut down and successor entities will begin the formal teardown process.
Currently, SB 659 has yet to be gutted and amended and made into the vehicle that many hope will offer the temporary reprieve. We learned today the draft language had to be sent back to the Legislative Counsel's Office for additional technical changes. Because the bill is hoped to be fast-tracked, it is imperative that the language be right from the start. It is the intent of the author and the various supporters to have the bill in print very, very shortly.
Those of us working hard on behalf of local governments have been canvassing the legislature to continue to educate them on the importance of passing this bill to grant breathing room for both the state and local entities to consider what will be next and what it should look like. Nearly every elected representative has expressed a strong desire to reinstate local economic tools that many of us consider to be Redevelopment Agencies as we have come to know them. It is increasingly clear different legislators have different ideas as to what that might look like. We should point out we still have no definitive understanding on 1) how Gov. Brown is viewing SB 659 and 2) if he is open to a Redevelopment Agency2, what that might look like.
Some of our most informative conversations with legislators have come from what they are not saying. There has yet to be a unified voice on an approach that not only will be pushed, but also that has a fair chance at becoming law. We see the possibility of three distinct tracks going on:
1) Reprieve and Redevelopment Agency2 . This is the preferred approach being pushed by the local government community. It certainly does have supporters in the legislature. Pass an extension of the dissolution date, utilize that extension to craft something else in the place of Agencies that are favorable to local governments.
2) Forget the extension, but Redevelopment Agency2 sounds good. One current of thought percolating that suggests that the impending Feb. 1 dissolution of Agencies allows for a completely clean slate from which bigger and better activities can arise. The leader of the Senate seems to be focusing on this approach over the others right now (see below).
3) To Heck with Redevelopment Agencies. Make no mistake, there is a group of legislators who are no friends of Redevelopment Agencies. They are perfectly okay with their demise but not replacing them in any way. They are not a large portion of the legislature.
Where are we? The adherents of Approach No. 1 continue to make the rounds and educate lawmakers. Conceivably, if the stars align, SB 659 (with the correct language), could be passed and signed into law in just a couple days. Still there is plenty of opportunity to stave off total dissolution, but there are a couple outstanding pieces of the puzzle, the largest being Gov. Brown.
What follows, from the Sacramento Bee, is the most comprehensive commentary on the fate of Agencies we have seen from a member of leadership:
“Senate President pro tem Darrell Steinberg told reporters this morning that he's not closing the door on pleas to postpone the dissolution of local redevelopment agencies.
“But let's admit it: The door is on one of those automatic arms that closes by itself, and Steinberg isn't jumping up to prop it open.
“As such, the conversation inside the state Capitol is likely soon to turn to what California's post-redevelopment world will look like… and Steinberg is cooking up an interesting idea.
“Last month's California Supreme Court ruling means the life support for more than 400 local RDAs gets unplugged on February 2. The case, as was widely reported, was really a high stakes gamble to undo the 2011 budget provision that would have allowed allowing redevelopment agencies to only stay alive through an expanded sharing of property tax dollars with schools and counties.
“Now, left with only extinction, RDA supporters are pleading for help. This morning, Sen. Alex Padilla (D-LA) said that he's introducing a bill to delay closing the door on RDAs for more than two months, and similar rumblings were heard last week.
“But the leader of Padilla's Democratic caucus seems to be already — politely —saying no.
“‘It's problematic,’ said Senate leader Steinberg of Padilla's proposal during a wide-ranging chat with reporters. In particular, he said that a delay of RDA shutdowns would mean local schools would miss out on a portion of property taxes that will be redirected from the shuttered agencies.
“The Senate pro tem said, though, that protecting one function of RDAs is likely to get support: affordable housing. Steinberg has a bill to allow dollars already earmarked for low- and moderate-income housing, perhaps as much as $2 billion, to remain in place. But on the broader issue, he suggested it's time to think differently about local economic development, echoing a point made by Assembly Speaker John Perez in an interview last week.
“Steinberg's idea is one that would combine two of his long-sought changes to local communities: More regional tax sharing and more ‘sustainable’ development.
A decade ago, then- Assemblymember Steinberg pushed legislation to require sales tax sharing between governments in the Sacramento region — a pilot program of sorts to keep cash-starved local governments from battling over projects like big box stores. AB 680 ultimately died without a final vote.
“In 2008, the Sacramento Democrat had better luck with a different local development measure, SB 375. The legislation signed into law by Gov. Arnold Schwarzenegger sought to (among other things) encourage local officials to stop suburban sprawl and make development plans that are, as the bill calls them, more ‘sustainable.’ Much of that law, most notably the greenhouse gas reduction element, is still in the process of being fully implemented.
“So Steinberg's pitch seems to be this: If locals agree to more of these kinds of development and regional strategies, then they should get money from the liquidation of redevelopment agency assets — buildings, parking lots, you name it.
“‘I would be willing to offer that money back to local governments,’ Steinberg said, ‘if the local governments use those tools to promote economic development consistent with SB 375,’ and if they ‘adopted some real elements of fiscal reform,’ including sales tax sharing similar to his 2001 plan in AB 680.
“The Senate leader admitted today that his plan isn't fully cooked. He says his staff is still researching the statewide dollar value of those RDA assets, but believes it's significant. He's also unsure whether the cash would be collected in one statewide pot and divvied up, or remain in the communities in which the RDAs used to exist.
‘Locals may balk at parts of the plan and, as with so many things, challenge its validity in court. But there seem to be two big takeaways from both today's chat with Senate pro tem Steinberg and last week's chat with Assembly Speaker Perez.
“The first is how much longer the Capitol discussion can remain focused on keeping RDAs alive. Leaders in cities across the state, Los Angeles, Oakland and Santa Rosa but to name a few, are all starting to comply with the RDA shutdown and time is running out.
“But secondly, and probably more importantly, can consensus in Sacramento be reached on a post-redevelopment proposal? There's still a lot of acrimony from the way the RDA fight went down, and it's merely the latest chapter in years of fighting between local and state forces about a dwindling supply of tax dollars and how to spend them.
“This time, the upper hand would seem to be held by the Legislature. No longer is it a debate about what cities and other local entities will allow Sacramento officials to do. Now, a major use of tax dollars will be scrapped — and the door will be closed — all on its own. And locals likely can only open that door back up with the Legislature's permission.
“As Senator Steinberg put it this morning, ‘the power dynamic has changed here.’”
Budget
The other major item of import being deliberated is the state budget. Since it appears there will not be a push to expedite the budget process, the normal and historical timelines for dealing with the budget will prevail. That means the legislature will shortly begin to fire up their budget subcommittees and start going through the governor's budget proposal line by line, either approving, modifying or outright rejecting his proposal. True to form, Gov. Brown is offering fairly dramatic changes and proposals in this year’s budget that is already giving consternation to many lawmakers. We will work closely with the legislature and the governor's office as the budget process unfolds and do everything we can to protect local governments throughout the process.
Just yesterday, the non-partisan Legislative Analyst's Office released their opinion of the governor's proposed budget. While they seem to applaud many proposals, they find fault with some, including the amount of revenue the governor estimates the state will realize. We encourage you to read the LAO's brief recommendations, and have attached it to this email for your consideration.
Mr. Rice may be contacted at tony@riceenglander.com
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