California Eminent Domain Report

Most Californians agree that our State's transportation system is in dire need of additional funding for additional improvements and repair.  The problem has always been where to secure the necessary funding.  In short, it has become more difficult to rely on the federal government, local and regional transportation agencies have become less reliant on the State, the gas tax has not been raised in years, and vehicles have become more fuel efficient, resulting in more miles traveled by more cars without the incremental increase in funding.  This week is a major turning point to ...

At its meeting last week, the California Transportation Commission allocated $174.8 million to 85 projects around the state.  Some of the projects receiving allocations this month include:

• $22.5 million for  construction of SR-905/SR-125 connectors in San Diego

• $20 million to realign Highway 1 in San Luis Obispo County away from the eroding shoreline

• $19.4 million to rehabilitate the Elysian Viaduct Bridge in Los Angeles

• $6.3 million for reabilitation of the Sierra Point Overhead bridge near South San Francisco

• $5.9 million to replace the aging Hilt Road Overcrossing on I-5 near ...

Despite being destroyed and dismantled, redevelopment in California has been born once again, this time reincarnated under the name of "Infrastructure Financing Districts."  Last week, Governor Brown signed into law AB 471, which amends section 53395.4 of the California Government Code to allow infrastructure financing districts to finance a project or portion of a project located within a redevelopment project area or former redevelopment project area.

Infrastructure financing district law now provides a mechanism to finance projects that would have otherwise ...

I saw a couple of California redevelopment-related stories over the past week that seemed worthy of at least a brief comment.

First, a court decision involving a rather bold argument by a public agency.

The City of Loma Linda, like so many California cities, used to have a redevelopment agency.  That redevelopment agency acquired property and embarked on various efforts to, well, redevelop things.  When Governor Brown eliminated California's redevelopment agencies, many projects were left in mid-stream.

In the case of Loma Linda, the redevelopment agency purchased some ...

On October 5, 2013, Governor Brown signed AB 401 (Daly, D- Anaheim) into law.  The new law grants Caltrans, Orange County Transportation Authority, the Santa Clara Valley Transportation Authority and other regional transportation agencies expanded authority to use design build for project procurement.  You can view a summary of the new law here.  Highlights include:

• Caltrans is now able to use design-build procurement for 10 projects on the state highway system;
• The Orange County Transportation Authority may now use design-build for improvements on the I-405;
• The Santa Clara ...

Earlier this week, Governor Brown vetoed AB 374, a bill to amend Code of Civil Procedure section 1263.510, the statute governing recovery of loss of business goodwill in an eminent domain case.  But it's not the veto that caught my eye so much as the veto message, which really left me scratching my head until I looked more carefully at what was going on (or at least what appeared to be going on).

Some history:  last year, the Court of Appeal issued the decision in People ex rel. Department of Transportation v. Dry Canyon Enterprises 211 Cal.App.4th 486 (2012).  The case purported to make some ...

Yesterday, we reported briefly on the Supreme Court’s decision in California Redevelopment Assn. v. Matosantos.  As many of you undoubtedly know by now, the outcome was the nightmare redevelopment agencies feared most, but that many (including us) had forecast after listening to oral argument last month. 

The Court upheld ABX1 26, allowing the dissolution of California’s redevelopment agencies to proceed, but struck down ABX1 27, the voluntary buy back program that would have allowed redevelopment to continue.  In particular:

• The Court had little difficulty upholding ABX1 ...

Today, the California Supreme Court issued its much-anticipated opinion in California Redevelopment Assn. v. Matosantos, the case challenging ABX1 26 and ABX1 27.  In a decision foreshadowed by the tone of last month's oral argument, the Court upheld ABX1 26, but struck down ABX1 27 as a violation of California's Proposition 22:

• "Assembly Bill 1X 26, the dissolution measure, is a proper exercise of the legislative power vested in the Legislature by the state Constitution."
• "A different conclusion is required with respect to Assembly Bill 1X 27, the measure conditioning further ...

While Governor Brown's push to eliminate redevelopment agencies seemed to drag on forever, California's redevelopment agencies were not so slow to act once the long-contemplated ABX1 26 and ABX1 27 became law.  On Monday, the redevelopment agencies filed suit directly in the California Supreme Court seeking to overturn the recent enactments.

The redevelopment agencies are represented by the California Redevelopment Association and the League of California Cities.  San Jose and Union City also joined in the lawsuit claiming they will face elimination since they cannot make the ...

For months, we've been reporting on the impending death of California's redevelopment agencies.  Even we had started to feel like the "boy who cried wolf" as we reported on iterations of the Governor's budget plan that didn't come to fruition. 

But this time, it's real.  Along with an overall budget package, this week the Governor signed into law ABX1 26 and ABX1 27.  ABX1 26 eliminates redevelopment agencies in California.  ABX1 27 provides a means of survival if the agencies will pay the state, collectively, $1.7 billion next year (the savings the Governor claims ABX1 26 would generate by ...

We're trying to keep on top of the developments over the future of redevelopment in California, but by the time we can get something drafted and posted, the story has already changed.  Here's a quick recap of what we know (and what we don't):

• Back in January, Governor Brown announced plans to eliminate California's redevelopment agencies as part of his plan to fix California's budget woes. 
• After several heated legislative sessions, bills to accomplish the Governor's proposal repeatedly fell a single vote short in the Assembly.
• In the aftermath of the failure to pass the Governor's plan ...

Yesterday, after heated floor debates, both the Senate and Assembly passed the two-bill package to end redevelopment as we know if.  In the Senate, the two bills each eked out the requisite 21 votes, with the final tally being 21-15. In the assembly the bills passed with the more comfortable margins of 51-23 for AB 26x and 47-28 for AB 27x.

Interestingly, these bills did not pass on party line votes, with some Democrats voting no and some Republicans urging a yes vote. A heated confrontation occurred when Assemblymen Don Wagner, R-Irvine compared provisions which compel redevelopment ...

It has been rumored for some time that a two bill strategy to eliminate redevelopment has been in the works.  Bill #1 would eliminate redevelopment agencies as of a specific date and bill #2 would exempt any redevelopment agency from elimination if it makes specified payments for the state. 

The text of those bills has now been released.  As predicted, Bill #1 (SB 14x / AB 26x) would, immediately upon enactment, suspend most agency activities including the issuance of new bonds, entering into new contracts, acquiring or disposing of properties, or taking other actions beyond the ...

As we have previously reported (Fate of Redevelopment Remains in Limbo), the bills to eliminate redevelopment agencies have languished due to Republican opposition.  With so many redevelopment agencies scrambling to use or secure redevelopment funds in an effort to protect them from being taken by Sacramento and with shortfalls in property tax revenues due to declining property values, redevelopment agencies are no longer as tempting a target for bridging the State’s budgetary shortfall.  

While redevelopment agencies may survive this budget cycle, the fight over their ...

I presented an update on eminent domain/redevelopment issues making their way through the legislature at this week's IRWA Chapter 67 (Orange County) monthly meeting, and I've received a few follow-up requests for more information.  So I decided it was probably worthwhile to put all the information here on the Nossaman blog. 

• Status of California Redevelopment Agencies:  It's now been several weeks since the  attempted Assembly votes, where Governor Brown's attempt to eliminate redevelopment agencies fell one vote short.  The Governor needs the $2.2 billion in ...

Despite daily rumors to the contrary, neither chamber took up the issue of redevelopment last week.

Both the Senate and Assembly held brief floor sessions Friday morning without voting on either SB 77 or AB 101, the bills eliminating redevelopment. While both houses remained on-call over weekend and today, the next floor sessions are not scheduled until Tuesday, March 29.

Meanwhile, there have been intensive lobbying efforts in support of the CRA and League of California Cities Alternative solution. Essentially, they are proposing that redevelopment agencies voluntarily ...

Another day has passed with no apparent movement on the two remaining elements of the Governor’s budget.  Rumors are circulating that plans are afoot for bypassing Republican legislators by placing a tax measure on the November ballot. 

Officially, the Governor’s office remains focused on the original plan.  In fact, the Governor’s spokesman, Gil Duran, was quoted as saying that it was a lie that the Governor has decided on a November election.  However, other anonymous sources say that while Brown is continuing to negotiate with Republicans to put the tax extension on a June ...

Both the Senate and Assembly have adjourned for the weekend, but what a week it has been in the battle over the future of redevelopment.

The bill to kill redevelopment, SB 77, came up for multiple votes in the Assembly on Wednesday. The bill initially garnered only 50 of the 54 votes needed for the two-thirds majority. The Governor, working out of the Speakers office just off of the Assembly floor, personally lobbied and cajoled legislatures throughout the day. Eventually, he won over two wavering Democrats and one Republican, Chris Norby of Orange County. By the time of the bill’s final ...

The Assembly has been in session since 11:00, and as best I can tell (I haven't been able to watch the feed the entire day), it has not yet taken up SB 77 or redevelopment again today.  My understanding is that further discussion is planned before the session ends, and that SB 77 was - at least at the beginning of the session - "item #7" on the agenda. 

In the meantime, the 11:00 session started a bit late this morning, and both houses almost immediately convened in caucuses.  Later, they moved forward with a few of the budget bills, taking them up and (apparently) approving them based on a ...

As the evening has worn on in the Assembly, SB 77 has been called to a vote several more times.  What started as 50 yes votes (four short of passage) has now become 53 "yes" votes - now a single vote away. 

Just before 7:00, the vote was 53-23, with 3 still abstaining.  Another vote was called at about 7:10, but the tally remained 53-23.  The plan at that time was to adjourn at 8:30 barring some change, but discussions continued until well past 9:00.

At about 9:20 p.m., the vote was called one more time.  It remained 53-23, one vote short.  At that point, the Assembly adjourned; it is scheduled to ...

SB 77 - the budget trailer bill to eliminate redevelopment agencies in California - has been debated on the Assembly floor much of the afternoon.  When it finally came time to vote at a little after 4:00 p.m. this afternoon, it was still unclear whether Governor Brown would receive the two-thirds vote necessary. 

As the votes came in, it became obvious that (1) the votes, as expected, would fall largely on party lines, with Democrats approving the bill and Republicans rejecting it, and (2) that the final result was going to be very close, one way or the other. 

Ultimately, the vote came in ...

It looks like Governor Brown's proposal to end redevelopment as part of his overhaul of California's budget may come to a vote on both the Assembly and Senate floors today.  AB 101 and SB 77 are scheduled for a 1:00 p.m. vote, and both include within them the plan to eliminate redevelopment agencies.  They require a 2/3 vote for passage.

In the meantime, the California Redevelopment Association is promoting an alternative proposal that it hopes will be presented on the floor.  They claim that the CRA proposal will:

• Provide significant funding to schools which could also help close the ...

We've blogged a lot in the past two months about redevelopment issues and the Governor's plan to help right California's budget by, among other things, eliminating redevelopment agencies.  But most of what we've written has viewed redevelopment from the 30,000 foot level. 

For policy-making decisions, viewing the big picture is hugely important.  But a case making news this week out of National City reminds us that the redevelopment fight is also quite personal. 

The Community Youth Athletic Center has been fighting what it perceives as an attack on its very existence for nearly four ...

As we noted in yesterday's post, Vote on Redevelopment Agencies' Future Uncertain, the Governor's deadline of March 10th is slipping away.  How far can it slip?  Some believe that a vote on his budget proposal could slip all the way into the third week of March, unless a few Republicans break ranks before then.  Thus far, at least publicly, Republican opposition to both the tax extension and abolition of redevelopment remains unabated.  Among the demands in the now infamous March 7th open letter to the Governor from five key Republican senators is "Save but reform Redevelopment Agencies and ...

The Legislature may deal a death blow to redevelopment in California as early as next week.  Late yesterday afternoon, on a party line vote, the members of the Budget Conference Committee voted to move the Governor's proposal to eliminate redevelopment to both houses for a vote by the Assembly and Senate members.  The Governor wants the State Legislature to send him a budget package to sign by March 10, the date by which he must secure a two-thirds vote to get a measure to extend tax increases on the June ballot.

Therein lies the rub.  A minimum of two Republicans are needed in the Assembly ...

Around California, agencies are scrambling to use or secure redevelopment funds in an effort to protect against anticipated legislation to abolish redevelopment agencies in California.  We've been following the story for weeks, but things are really heating up now. 

As just a few examples from the past couple of days:

• A City of Perris councilman, Mark Yarbrough, is asking the city staff to deplete existing redevelopment funds before the state can seize them.
• Tuesday night, the San Mateo City Council voted to use $34.2 million in redevelopment funds for local projects "effectively ...

In a report issued in advance of today’s Senate Subcommittee hearing on the issue, the Legislative Analyst's Office reiterated its support for the Governor’s call for an end to redevelopment in California.  While acknowledging that redevelopment does lead to economic development within redevelopment project areas, the report asserts that there is no reliable evidence that it attracts business to the state or increases overall regional economic development. 

This may all be well and good, but analyzing the issues this way creates a subtle - but important -shift in the ...

Over the weekend, Chlorinated Liberty posted a pretty good article that articulates the primary reasons people cite as the basis for abolishing redevelopment agencies.  The article, "How Eliminating California's Redevelopment Agencies Spurs Economic Growth," takes a reasoned approach to why the free market is better equipped to handle redevelopment and blight remediation than the government - and its redevelopment agencies. 

The article walks through some statistics that show that many of California's redevelopment agencies did not report any job creation generated by their ...

In the wake of the Governor’s proposal to abolish all redevelopment agencies, State Controller John Chiang announced that his auditors would be reviewing 18 redevelopment agencies.  As he stated in his press release,

The heated debate over whether the RDAs are the engines of local economic job growth or are simply scams providing windfalls to political cronies at the expense of public services has largely been based on antidotal evidence.

These reviews, designed to assist lawmakers in their budge debates will therefore focus on how the targeted RDAs define a blighted area ...

Earlier this month, we reported on the Governor's budget proposal, which includes the bold plan to "disestablish" (my new favorite word) redevelopment agencies as part of his plan to shore up California's budget.  We then told you about how the budget proposal interacts with Proposition 22, passed last November. 

Not surprisingly, the story is far from over.  A January 21 article in the Los Angeles Times by Patrick McGreevy, "Cities may sue governor over his redevelopment proposal," reports that earlier today, more than 100 mayors and city council members came together to condemn ...

The large pool of tax increment revenue flowing to the state’s 400-plus redevelopment agencies has long made a tempting target for a cash strapped State.  Time and again Sacramento has dipped into this pool to offset budget deficits.  Local interests have fought back, both at the ballot box (e.g., 2004's successful Proposition 1A "Protection of Local Government Revenue"), and in the courts.  Sometimes local interests gained the upper hand and sometimes the advantage went to the State.

Proposition 22, approved by the voters in November, was intended by its backers to be the ultimate ...