Cities Sue State Over "Ransom" Money

Mayor Sanders calls legislation "most arrogant I've ever seen"

By Gene Cubbison
|  Tuesday, Jul 19, 2011  |  Updated 2:18 PM PDT
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Redevelopment Rumble to Hit Court

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California Gov. Jerry Brown delivers a keynote address during the 2011 Pacific Coast Builders Conference on June 23, 2011 in San Francisco, California. California Gov. Jerry Brown delivered his address as State legislators scramble to revise a budget that Gov. Brown vetoed.

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Redevelopment Rumble to Hit Court

The state wants about a quarter of the cities' redevelopment tax proceeds for this fiscal year -- nearly $2 billion.
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Lawyers for hundreds of California cities are taking Gov. Jerry Brown and the Legislature to court over billions of dollars in redevelopment money which the cities say is essential for revitalizing blighted neighborhoods.

The cities and their redevelopment agencies are accusing the state of a "ransom" demand, for the privilege of keeping their urban renewal powers.

'Sacramento,' so to speak, wants the cities to cough up about a fourth of their redevelopment tax proceeds this year -- nearly $2 billion -- and $400 million, give or take, for every year after.

"The filing of this lawsuit," San Diego City Councilman Kevin Faulconer told reporters Monday morning in City Heights, "is absolutely necessary to tell the state, once and for all, that they cannot balance their budget on the backs of our local neighborhoods."

City Heights served as an object-lesson backdrop for a news conference of city officials from throughout the county, as they announced the lawsuit spearheaded by the League of California Cities and California Redevelopment Assn.

Redevelopment projects in City Heights over the past decade have created clean, safe, economically vibrant "urban village" in what once was a crime-ridden stretch of failing businesses and crack houses.

City Heights is one of 17 redevelopment areas in San Diego.

The wealthiest is downtown, from which the state wants $50 million this fiscal year; from all the others, a total of about $20 million.

Meantime, the county's smaller cities stand to lose a combined $75 million dollars for starters.

Unless they pay up, their redevelopment agencies are eliminated under a new state law.

"That is more than ransom," said National City Mayor Ron Morrison. "Jesse James used a gun, y'know, when he robbed people. Believe me, this is a gun at the head of each and every one of our communities."

Morrison said National City, whose widely known "Mile of Cars" got its start with a redevelopment project, stands to lose funding for other business district improvements and hundreds of housing units for low-income families and seniors.

The lawsuit's filing is aimed at the State Supreme Court, because the cities argue that the Governor and Legislature are violating a Constitutional amendment -- Prop. 22 -- which the voters passed last November by a 61 percent majority.

It bars Sacramento from confiscating local government revenues.

But if the cities prevail in the case, according to local officials, a so-called "poison pill" provision in the challenged legislation takes effect -- prohibiting their redevelopment agencies from issuing revenue bonds for renewal projects.

It's not clear whether the Supreme Court would consider a challenge to that provision along with the constitutional issue, or remand it to a lengthy civil trial court process, subject to appellate review.

"So what (the Goveror and Legislature) are saying," said San Diego Mayor Jerry Sanders, "is, 'Not only are we sticking a gun to your head and taking your money, but if you try to fight at all, then we're taking away your ability to do anything locally.'"

Sanders added, with emphasis: "It is the most arrogant piece of legislation I've ever seen."

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