California Redevelopment Agencies: Counties Split On Supreme Court Ruling

This article comes to us courtesy of California Watch.

By Kendall Taggart

As cities statewide bemoan the California Supreme Court's recent decision to uphold the abolition of redevelopment agencies, counties are divided about the potential consequences.

It's still too early to tell what the fallout will be, but Santa Clara County has been the most vocal in supporting the ruling. While many counties sat on the sidelines, Santa Clara forcefully argued before the court that the agencies should be dissolved.

But about 400 miles south, Riverside County Supervisor John Benoit said he is disappointed that his county lost an essential tool for combating blight. Riverside has been one of the few counties to make use of redevelopment areas, which have been used almost entirely by cities.

The split highlights the different circumstances local officials now face in the wake of the court's decision.

In contrast to Santa Clara County, where most development happened in cities, such as San Jose, Riverside County officials used the funds themselves to bolster infrastructure in unincorporated areas under their jurisdiction.

Jean Kinney Hurst, legislative representative for the California State Association of Counties, said the group's members are all over the map. "It's fascinating and a little frustrating up here because it'd be easier if we all had a little more similar view on how it should proceed," she said.

When an area is designated a redevelopment zone, a portion of the property taxes is diverted away from counties and other local services in order to fund the agency's activities.

"The negative effect of redevelopment on the county's resources has been enormous," said James Williams, deputy county counsel of Santa Clara. "The most critical thing to understand about redevelopment agencies is that redevelopment represents a diversion of property tax money. There's one pie, and it's about how it is distributed."

Santa Clara County estimates that without redevelopment agencies, the county would have received an additional $90 million annually in property taxes.

In contrast, Riverside County's tax base is more diverse and, unlike Santa Clara County, its revenue streams are spread more widely across unincorporated communities and multiple cities that were not as active in redevelopment.

Benoit has found himself a lone voice in his campaign to highlight the benefits of redevelopment for counties. He said it is unfortunate other counties did not take advantage of the opportunity.

"There are a lot of areas that could have benefited the way Riverside County did," he said. "We're not the only ones with large demographics of farm labor or immigrant populations, and others could have done more. They chose not to, and as a result, they didn't have a horse in the race when this debate came up."

Rural counties have been largely unaffected by the decision because they have few redevelopment agencies, said Paul A. Smith, senior legislative advocate for the Regional Council of Rural Counties, which represents 31 counties.

"If there is a belief now that because redevelopment agencies have been abolished that there is significant more revenue coming into the coffers ... that would be a misnomer in rural land because we never had those redevelopment agencies, so we had never had that property tax increment being diverted," he said.

Local redevelopment agencies, counties and cities now are scrambling to comply with the law, which has set up strict deadlines for dissolving the agencies and setting up trusts for their remaining assets. Santa Clara County doesn't expect to see any additional money for years while the process unravels.

Kendall Taggart is an investigative reporter for California Watch, a project of the non-profit Center for Investigative Reporting. Find more California Watch stories here.