Agencies On The Edge

Agencies On The Edge

In a result announced just before the New Year, the California Redevelopment Association (CRA) essentially lost a double-down bet with the California Supreme Court, leading to the imminent dissolution of all the state’s redevelopment agencies. Now the association and its allies have until next month to try to once again avert catastrophe through legislative maneuvering and lawsuits.

In CRA v. Matosantos, the court on December 29 upheld ABX1 26, known as the redevelopment “elimination” bill, but struck down ABX1 27, the bill that would have allowed agencies to remain in operation as long as they made a payment to the state. The bills were passed as part of the 2011-12 state budget.

The CRA had filed the lawsuit in September, hoping to prevent not only their elimination but also to prevent millions in redevelopment funds from being diverted to local municipalities. Most agencies thought they would at least be able to buy their way out of elimination through ABX1 27, but after the CRA’s loss, acknowledged by the agency as the worst possible result, that option has been removed.

“We felt all along the likelihood of this outcome was a relatively small one. With  hindsight we might have done things differently,” Jim Kennedy, Interim Executive Director of the California Redevelopment Association, told AN.

Now CRA-supported building projects across the state—from stadiums to affordable housing projects—are in severe jeopardy. The court set February 1 as the date for CRAs to start winding down operations.


“CRA is ready and willing to engage in immediate dialogue with Legislators and the Governor on a meaningful ‘fix’ to this problem,” said Kennedy. He told AN that the first order of business was to extend the February 1 deadline back sixty days to “give us some breathing room,” an effort that has been supported by several legislators, he said.

After that, Kennedy said the association would propose a streamlined version of redevelopment, which he is calling “Redevelopment 2.0,” to the legislature. Under that plan all CRA activities would be limited to the following areas: Jobs and economic vitality; Affordable Housing; Brownfield Remediation; Infill and Transit Oriented Development; Military Base Reuse, and infrastructure.

In addition, said Kennedy, the CRA would need to work with the legislature to “figure out how some portion of redevelopment revenues can be deployed to address the state’s structural budget problems.” Those efforts, of course, could not violate Prop 22, the measure passed in 2008 that prohibited the state from using redevelopment funds to balance its budget.

Kennedy said the CRA was not planning any future lawsuits, but some redevelopment agencies have already done so, including a group of CRAs in Orange County.

There are about 400 municipal redevelopment agencies in the state. The largest, in Los Angeles, could see the loss of over 20 significant projects and initiatives, including $100 million in grant funds to improve public infrastructure and create affordable housing and transit oriented development; the 126-unit Noho Senior Arts Colony in North Hollywood; the renovation of the historic Westlake Theater near downtown; the 35,000 square foot Wattstar Theater in Watts; the Cleantech Manufacturing Center downtown; the gigantic Grand Avenue Project downtown.

“This year alone we have created more than 18,400 jobs through the Community Redevelopment Agency in Los Angeles. A proven economic development catalyst, these investments have transformed communities like North Hollywood and Bunker Hill with jobs and opportunity,” said LA Mayor Antonio Villaraigosa, in a statement. Villaraigosa has been one of the state’s most outspoken redevelopment supporters.

San Francisco CRA director Fred Blackwell has said that the loss of the CRA could jeopardize 1,400 affordable housing units as well as several major projects, including the redevelopment of the Hunters Point Shipyard. And Riverside’s CRA’s now-jeopardized projects include the city’s municipal auditorium, a multi modal transit center, and the rehabilitation of its Metro Museum, among many others.

“Time is of the essence, and the future of California’s economy is at stake. We hope legislators will join us in this important effort, for the sake of our future,” said Kennedy.