Duarte to Support CRA Pending Lawsuit
to Stop State’s Latest Raid of Redevelopment Funds
The City of Duarte will support a lawsuit, expected to be filed in October by the California Redevelopment Agency, to stop the State in its latest effort to raid $2.5 billion in local redevelopment agency funds over the next two years.
'Duarte will either be a party to the lawsuit or part of a class action lawsuit filed by the CRA,' said Assistant City Manager Kristen Petersen.
'The financial impact of the State’s recent passage of AB 26 4x, legislation to take redevelopment funds to balance the State’s budget, will devastate the activities of the Duarte Redevelopment Agency or bring it to an end. These are funds that we will never get back,' said Petersen.
Last April, CRA was successful in a lawsuit that blocked a State proposal to take $350 million in redevelopment funds. A ruling by the Sacramento Superior Court deemed the State’s proposal unconstitutional on the grounds that redevelopment funds can only be used 'to finance or refinance… the redevelopment project.' The State has appealed the ruling.
The State claims the 2009 budget legislation, AB 26 4x, fixes the constitutional issues raised by the Superior Court by directing the redevelopment funds to schools and students within the boundaries of a redevelopment agency project area. It claims that funding schools within a redevelopment project area 'furthers' the purpose of redevelopment. These funds do not in any way increase the amount going to the schools, it just replaces the share that the State owes to the them with City dollars.
CRA and its attorneys believe that AB 26 4x is unconstitutional on the same grounds as the earlier raid attempt. AB 1389 was successfully challenged because the unquestionable purpose of the budget bill is to help balance the State’s budget, not to further the purpose of redevelopment. Under AB 26 4x, schools will not receive any more in funding than already guaranteed from the State. Rather, the legislations simply shift the obligation from the State to redevelopment agencies. In addition, State and Federal Constitutions prohibit the Legislature from enacting laws that impair the obligation of contract. Raiding $2.05 billion in redevelopment funds will jeopardize bond covenants and other contractual obligations entered into by many redevelopment agencies.
If the State is successful in all of its efforts to take redevelopment funds, the impact to the Duarte Redevelopment Agency will be $2.7 million in 2009-2010, $560,000 in 2010-2011, and $600,000 if the 3rd District Court of Appeal overturns the Superior Court ruling on the 2008-2009 case. 'It would all but completely shut down the City’s ability to do future commercial redevelopment projects. The Duarte Redevelopment Agency would be left with less than $3 million in funds. This is a fight for survival,' said Petersen.
One major proposed redevelopment project in jeopardy is a 20-acre Transit Oriented Development around the proposed Gold Line light rail project, adjacent to the City of Hope National Medical Center. The Duarte Redevelopment Agency is in an Exclusive Negotiation Agreement with Los Angeles based Lowe Enterprises Real Estate Group. The project would include residential, retail, public plaza, offices, and park and ride space, bringing revitalization, affordable new housing, jobs and critical new tax revenue to the City.
