Pay or Go Away: Redevelopment Under Siege

Dixon's Redevelopment Agency is at a crossroads.

It must decide to either pay the state hundreds of thousands of dollars in what City Finance Director Jeremy Craig, the California Redevelopment Association (CRA) and the League of California Cities (LCC) have called a "ransom" payment or shut itself down.

Dixon’s RDA needs to make its decision by the state’s Oct. 1, 2011, deadline.

But if a lawsuit filed Monday afternoon by CRA, LCC, and the cities of San Jose and Union City is successful in getting the California Supreme Court to issue a stay of two bills – AB 26X and AB 27X – the decision to pay or go away would be held off until the court decides what to do with the lawsuit.

Under AB 26X, a successor agency would be put into place to administer the shutdown if Dixon’s RDA votes to dissolve. An oversight board – comprised of seven members, one from the City of Dixon – would oversee the successor agency and have the authorization to void existing RDA contracts and sell off assets.

Under AB 27X, the city’s RDA could continue existing in a limited fashion. The bill signed into law last month as part of Gov. Jerry Brown’s budget (along with the sister bill AB 26X) gives cities and counties throughout California the option of paying $1.7 billion to schools and special districts to continue existing. The cities and counties with RDAs would subsequently have to pay $400 million to the state for schools.

Dixon’s share of that figure is $865,000 for 2012, and $240,000 for 2013, according to Craig, who made a presentation to DRDA last month explaining the situation.

Several projects are at risk in Dixon should RDA go away.

“The Economic Development Director’s Office is in charge of RDA programs as well as affordable housing programs, both of those are severely impacted by state takeaways of funding,” Economic Development Director Mark Heckey said.

Heckey noted the following projects:

• , a 60-unit, multi-family low-income housing for seniors.
• , the completion of Downtown Dixon infrastructure for draining.
• Reduces the amount of incentives that might be available for creating a public park adjoining the new pedestrian undercrossing by the Transportation Center, currently being used by the .
• Potentially impacts the ability to transfer the site to one of two entities including supermarket chain Viva Supermarket, based in Sacramento, or the .

Heckey also noted: “There has not been, for two years, money available for small business loan programs and grant programs in the Downtown (area) such as the Barbershop Project and remodeling expansion.”

At the heart of the lawsuit filed Monday lies the claim that AB 26X and AB 27X violate Proposition 22, passed in November 2010 by 61 percent of California voters, that prohibits the state from “seizing, diverting, shifting, borrowing, transferring, suspending or otherwise taking or interfering with,” revenue dedicated to local government, according to the CRA and LCC. The revenues protected by Proposition 22 specifically include the annual increments of property taxes allocated to California’s 400 redevelopment agencies.

“California voters overwhelmingly passed Proposition 22 just eight months ago to stop State raids, shifts and diversions of local redevelopment funds,” said Chris McKenzie, executive director, League of California Cities in a press release. “The governor and legislature have blatantly ignored the voters and violated the State Constitution. We must now go to the Supreme Court to uphold the voters’ will and the Constitution by overturning this unconstitutional legislation. We are confident the Courts will uphold the will of the voters.”

“We’re confident that this measure – which was passed by the Legislature and signed by the Governor – is legally sound," said H.D. Palmer, deputy director at California Department of Finance. “Redevelopment agencies were created by an act of the Legislature in 1945, and they can similarly be dissolved by an act of the Legislature.  We cannot afford to be spending more than a billion dollars a year on local redevelopment projects at a time when our core services – including education and public safety – are being cut.”

Dixon's decision, and those of RDAs throughout the state, will no doubt be guided by how the California Supreme Court interprets and  reacts to the lawsuit.

Editor's note: an earlier version of the story did not include the Downtown Dixon Business Association as one of two entities that submitted proposals to develop the Pardi Market site.