A pretty dull Monday on the redevelopment front. We're hearing that it's likely that the Assembly will not take up the issue again today or tomorrow, so Wednesday may be the next big day.
In the meantime, the California League of Cities has officially endorsed the CRA's alternative proposal, which is not particularly surprising since one of the "losers" if redevelopment is abolished is likely to be the cities.
The League's summary of the CRA proposal is as follows:
- Local redevelopment agencies can voluntarily suspend their housing set-aside for FY 2011-12. An equivalent amount of funds must then be contributed to local school districts in project areas.
- In addition, or alternatively, redevelopment agencies could voluntarily contribute up to 10 percent of their non-housing tax increment revenue stream to local school districts each year for 10 years, beginning in FY 2011-12.
The CRA reports that it believes its proposal could generate $2.7 billion over its 10-year life, purportedly $1 billion more than the Governor's plan for eliminating redevelopment would generate.
Finally, on the legal front, the posturing is already well underway. An attorney hired by some redevelopment agencies is reported in a March 21 Bloomberg article by Michael B. Marois, "California Cities, Counties May Be Sued Under Brown Budget," as opining that the elimination of redevelopment agencies could result in claims of securities fraud by disgruntled bond holders. According to William Marticorena, head of public finance at Rutan & Tucker, elimination of redevelopment agencies could result in a downgrade of existing bond ratings which, in turn, could damage investors in those bonds:
The market-value declines may not be small and the damages could be immense.
The Treasurer's office was quick to respond, calling predictions of securities fraud lawsuits a "fairy tale." According to Tom Dresslar, a spokesman for Treasurer Bill Lockyer,
The notion that there is going to be securities fraud and lawsuits and all manner of legal chaos if the governor’s plan is adopted is a fairy tale.
In the end, I guess it's not quite as dull a day as I initially thought. We'll report back if something changes, but for now, everyone can take a minute to pause and catch their breath.
Rick Rayl is an experienced litigator on a broad range of complex civil litigation issues. His practice is concentrated primarily on eminent domain, inverse condemnation, and other real-estate-valuation disputes. His public ...
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