From Josh Rosa at PublicCEO.com, an interesting proposition – what if the California Supreme Court, in ruling in the lawsuit, CRA v Matosantos, over the constitutionality of the Redevelopment Death and Resurrection laws, AB1X 26 and 27, decides to split the difference and allow one law to stand and strike down the other?
There is, however, a third possible outcome. The Supreme Court could uphold the first law (eliminating redevelopment) and strike down the second. This potential “split decision” would inevitably end redevelopment, without any backup plan to compensate cities for such a dramatic loss. Bundled together, the two laws effectively form a policy of shrinking redevelopment radically, but allowing it to go on in a smaller version. To continue existing, for example, the Sacramento Housing and Redevelopment Agency is preparing to make a $21.9 million payment, which is roughly 40 percent of its total tax-increment funding. These cuts are painful but, in theory, SHRA will survive and persevere. Throughout the state, hundreds of agencies are preparing their own voluntary payments and adjusting to a new reality of scarcer resources. But that safety net might be taken down. Stripped of the reinstatement law, the Legislature’s last budget deal could potentially end redevelopment permanently [emphasis added].
Whichever way the Supreme Court rules, redevelopment funding for all development, including affordable housing, is going to stay shrunken for some years to come, if it is available at all. Lenders and developers should be well down the road of planning for this very-likely outcome – what is your organization doing to prepare?
The preservation and creation of affordable housing has been a longstanding goal of both Los Angeles County and many of its 88 cities, but the demise of redevelopment agencies delivered a blow to low-income residents struggling in one of the nation’s most difficult housing markets.
