What No Redevelopment Agency Means for South Pas

In a decision that will reverberate throughout the state, the California Supreme Court upheld a law Thursday that  and struck down a law that allowed the agencies to pay to stay in operation.

The ruling in California Redevelopment Association v. Matosantos clears the way for the state to dismantle redevelopment agencies and use their assets to fund education programs. The CRA contended that the state did not have the authority to eliminate redevelopment agencies, but the court disagreed.

"[The state's] power includes the authority to create entities, such as redevelopment agencies, to carry out the state's ends and the corollary power to dissolve those same entities when the legislature deems it necessary and proper," the court's ruling reads.

South Pasadena's Financial Constraints 

South Pasadena passed a "regular" ordinance in August that allowed it to make a $230,000 payment to the state to stay in operation, but that law allowing such ordinances was invalidated by the court Thursday.

The City has moved to shield assets by transferring them from the Community Redevelopment Agency (CRA) to the City. But the Supreme Court's decision will still have an impact on South Pasadena with $400,000 in CRA funds dedicated to the City's general fund annually. 

"The Supreme Court decision certainly introduces several implications including but not limited to: the proposed downtown project, affordable home owned by the CRA and more budget constraints to the City’s general fund, since several City employee salaries partially come from CRA funds for work related to CR matters," said Interim City Manager Sergio Gonzalez. 

Under the law upheld by the court, the agencies must turn over their assets to an  that will decide on how that money is doled out. 

Downtown Redevelopment

South Pas has already entered an Exclusive Negotiating Agreement with Genton Property Group for the development of the Downtown Project. 

"This was due to the States forbidding any redevelopment agency from incurring any new debt or entering into any new agreements," explained Gonzalez via e-mail. 

"This makes things very complicated since the State has actually the authority to eliminate redevelopment agencies but cannot spend the tax increment for any other purpose than redevelopment. Lots of analysis will occur in the coming days and much more activity to come when the legislature goes back into session," he continued. 

Odom Stamps, who has served on the Community Redevelopment Commission (CRC) since its inception in 2003, told Patch in July that the City securing $2 million towards the estimated $50 million project was an important step in pushing the downtown project forward. 

"We were pretty far down the road before Governor Jerry Brown even got elected," said Stamps. 

CRA Responds 

In a written statement, the CRA and League of California Cities vowed to fight on and called for their own special legislation that would re-establish redevelopment in California.

"Without immediate legislative action to fix this adverse decision, this ruling is a tremendous blow to local job creation and economic advancement," wrote CRA Board President Julio Fuentes in the statement.

"The legislative record is abundantly clear that legislators did not intend to abolish redevelopment. We hope to work with state lawmakers to come up with a way to restore redevelopment."

Check back with Patch for updates on this story.