Galt is among the communities that will lose redevelopment funding under a decision passed down by the state’s high court Thursday morning.
Gov. Jerry Brown and state lawmakers have the authority to eliminate community redevelopment agencies but not make them redirect their taxes to local services, the California Supreme Court ruled.
It is a decision that will likely send both sides back to negotiations.
It’s not yet clear how the court decision will ultimately affect Galt’s downtown revitalization efforts, as City Manager Jason Behrmann said staff members are still trying to sort out the implications. However, he said the city will not be forced to make a $1 million payment to the state to be in compliance with a new law, as feared.
In June, lawmakers passed bills that shut down state redevelopment agencies — or imposed hefty fees on cities like Galt that wished to continue operating them. Galt leaders said the city might have had to pay as much as $1 million to the state to continue operating its redevelopment efforts.
“The Legislature never wanted to kill redevelopment agencies, they just wanted the money,” Behrmann said, adding that he expects lawmakers to return in the new year with new guidelines for redevelopment agencies.
Until then, the city can continue for at least the next six months with design work already underway downtown. The Old Town Relocation Project has been supported with money collected by the city and the county specifically for redevelopment.
“All the work we’re doing right now can continue to go forward,” Behrmann said. “Hopefully within that (six months), the Legislature will come up with a fix. If not, those plans just kind of sit on the shelf waiting for funding.”
The redevelopment agency has been a vital part of the Old Town Relocation Project. Those efforts have allowed the city to sell blighted property downtown and revitalize the buildings for new tenants.
While a number of new businesses have moved in, the city is gearing up for new improvements in 2012, including creating a quiet zone along the railroad tracks and improving roads that link downtown with the new central interchange.
In a statement, Brown said the California Supreme Court validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety instead of redevelopment agencies.
The case not only has long-term implications for the state’s budget but also will determine the fate of redevelopment agencies, which primarily are controlled by cities and counties to promote construction projects and revitalize blighted districts. Critics say some of the agencies have strayed from that intent and instead have evolved to benefit private developers, while audits have revealed questionable projects and some misuse of money.
State justices heard arguments from both sides of the redevelopment debate last month.
The governor and supporters of the law say redevelopment agencies have become little more than slush funds for private developers, and they want the tax money generated by new developments to be diverted from the agencies to local services and agencies.
Local government officials say it does not make sense for the state to eliminate redevelopment agencies, which contribute $2 billion a year in economic activity. They say the agencies are their main vehicle to rebuild communities and create jobs.
After World War II, the Legislature allowed cities to combat blight by creating special districts for redevelopment. Growth in property taxes in those areas then could be used to finance more projects, known as tax-increment financing.
In turn, the agencies have used their power to acquire property by eminent domain and sell, lease or develop the land.