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Senate leader shoots down redevelopment extension, says there aren’t enough votes

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POSTED January 26, 2012 8:45 p.m.


 

SACRAMENTO — (AP) — A bill that would delay the elimination of the 400 community redevelopment agencies in the state does not have sufficient support to pass by the Feb. 1 deadline, the leader of the state Senate said Thursday.

"It's not going to happen," said Senate President Pro Tem Darrell Steinberg, D-Sacramento.

He and Assembly Speaker John Perez, D-Los Angeles, were skeptical about the effort to keep the redevelopment agencies functioning, and Gov. Jerry Brown is against the bill.

Leaders of cities had been trying to fashion a compromise with lawmakers after the state Supreme Court ruled the state had the authority to eliminate the agencies and use their property tax money for local services.

"The focus needs to be on recreating a new set of economic development tools for cities and not on trying to keep alive the current form," Steinberg said.

Lawmakers voted to eliminate the agencies last summer as part of their budget package and to use funds generated by the entities for local services. Brown has said the money that agencies would spend on future projects is needed now by schools, law enforcement and other services.

The agencies were created after World War II to help restore blighted neighborhoods, though critics say many have been used to benefit private developers building big box stores, sports complexes and other projects.

Regardless of whether the agencies' lifetime is extended, the Legislature needs to quickly address problems that could lead to a possible default on bonds, said Chris McKenzie, executive director of the League of California Cities.

All three major credit rating agencies — Standard & Poor's, Moody's and Fitch — have issued warnings about redevelopment bonds because of the pending elimination of the agencies. The rating companies have either downgraded or placed redevelopment bonds on negative watch, citing concerns about debt service payments.

Some projects could be stranded even though they already have been approved, and other property might have to be disposed of at a loss to the state and local government and to taxpayers, McKenzie said.

"There are major financial consequences for the state and local governments if these problems aren't addressed," McKenzie said.

Sen. Alex Padilla, D-Los Angeles, proposed a bill, SB659, extending the deadline for closing redevelopment agencies to April 15, but Steinberg said he doubted the bill would come up for a vote. Padilla did not immediately return telephone messages left with a spokesman.

John Vigna, a spokesman for Perez, said the governor has made it clear he opposes extending next week's deadline. The speaker's focus will remain on "trying to find a mechanism to preserve some of the important economic development functions that RDA's perform," he said.

Steinberg said supporters should concentrate on trying to create more affordable housing, which is one of the goals of redevelopment agencies, and on using redevelopment agency assets to pay for other economic projects.

He said the Senate next week will consider his SB654, which would let local governments spend $2 billion in remaining affordable housing redevelopment funds.

He also calculates that existing redevelopment agency assets are worth more than $2 billion, saying the assets could be sold and the money given back to cities and counties to use for economic development.

"I'm open to other tools as well," Steinberg said, including recreating some form of tax-increment financing program that relies on the same funding strategy as redevelopment agencies.

 

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