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February 24, 2012 > Dissolution of redevelopment agencies benefits County residents

Dissolution of redevelopment agencies benefits County residents

More funds to be available for schools, County programs and services and special districts

Submitted By Gwendolyn Mitchell and Laurel Anderson

On December 29, 2011, the California Supreme Count delivered its decision in the California Redevelopment Association et al. v Matosantos et al. case, finding the provisions of ABX1 26 (the "Dissolution Act") constitutional and ABX1 27 (the "Alternative Redevelopment Program Act") unconstitutional. The Court's decision means all RDAs will be dissolved under the constitutional Dissolution Act and none will have the opportunity to opt into continued existence under the unconstitutional Alternative Redevelopment Program Act. The Court's decision is final.

The Dissolution Act: Continues the suspension and prohibition of most redevelopment activities in effect since late June 2011; dissolved RDAs as of February 1, 2012; creates "Successor Agencies" and "Oversight Boards" to continue to satisfy enforceable obligations of each former RDA and administer the dissolution and wind-down of each dissolved RDA; and establishes roles for the County Auditor-Controller, the State Department of Finance and the State Controller's Office in the dissolution process and in the satisfaction of enforceable obligations of former RDAs.

Successor agencies are responsible for the direct management of the wind-down process, under the purview of the Oversight Board. Successor agencies are primarily responsible for the initial creation of the schedules of enforceable obligations and for making the necessary payments under the approved schedule to wind-down RDA affairs.

The California Supreme Court's decision adopted arguments made by Santa Clara County, a party to the case. The result is that scarce public dollars will return to schools, counties, fire districts and other local agencies to perform vital public services. Statewide, RDAs were diverting 12 cents of every property tax dollar away from schools, counties, cities and special districts. This amounts to $5.5 billion each year, mostly from schools.

"The California Supreme Court has issued its definitive decision upholding the action of the legislature and we're prepared to take the next steps," said President George Shirakawa, Santa Clara County Board of Supervisors. "Although it will be awhile before we actually see useable revenue, these funds may make it possible to create jobs and programs that will help people to become more employable."

"The state's decision to dissolve redevelopment agencies means that more local property tax revenue will go directly to schools, cities, and the county," said Supervisor Mike Wasserman, Chair of the County of Santa Clara Board's Housing, Land Use, Environment and Transportation Committee.

The dissolution of the redevelopment agencies in Santa Clara County will eventually result in $286M in revenue each year being returned for local priorities. After the debts of the RDAs are paid, every year a substantial $143M will be returned to the schools. As a result, some school districts in the county will likely become basic aid districts, which also will give them more revenue and better control over how the funds are used.

Over the past 10 years, the County has reduced annual budgets by more than $2 billion, resulting in the loss of jobs and contraction of programs that contribute to the overall wellbeing and vitality of the area. These reductions were necessary, partly because of the economic downturn and partly because property tax dollars were diverted from county general funds to redevelopment agencies.

"The redevelopment agencies went beyond their legislated purpose - the elimination of blight - to become economic subsidies for private development," said County Executive Jeffrey V. Smith. "While there is no argument that many worthwhile buildings were constructed, the question remains - At what cost? At what cost to basic community services? At what cost to our children? At what cost to our ability to serve as a safety net to those with no other options?"

"The entire country is moving towards a paradigm shift," Smith continued. "The old paradigm measured wealth based on property. The new paradigm will measure wealth based on employment and the ability to provide for one's family."

"Not only will funding go to schools and special districts, it also will help with the county's senior programs, health care, transportation, libraries and public safety," said Supervisor Dave Cortese.

"I hope to see more money going into the county's general fund for Valley Medical Center to keep emergency rooms open and to pay the $2 billion per year needed for the Healthy Kids fund. Eventually, it could mean the elimination of library fees that were introduced last summer to help keep county libraries open and functioning," Cortese continued.

Under the wind-down procedures, the County Auditor-Controller has a substantial role in implementing the dissolution process. Earlier this month, the Board of Supervisors appointed representatives to serve on the Oversight Boards as required by the Dissolution Act.

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