SB 93 and it’s impact on redevelopment $$ into non-project areas

Although I spoke to Grantville Action Group, GAG,  president Brian Peterson yesterday regarding the passage of  SD Senator Kehoe’s SB 93, and its relationship to his local redevelopment agency fight, I decided to await his update rather than simply commenting on our discussion.
Earlier this year GAG members attended our  MORR/CURE eminent domain conference that was held in Long Beach, CA. The following story was  just received from Brian:

Brian Peterson: Grantville inspires victory for redevelopment reform

By Brian Peterson
For the past month Sacramento has been the scene of a contest of wills between Gov. Arnold Schwarzenegger and the state Legislature. At issue is a “complex package of water bills.” The governor was trying to force a water agreement between party leaders of the Senate and Assembly by threatening to veto other legislation. Of the more than 700 bills that were awaiting the governor’s signature, or not, Dan Walters of the The Sacramento Bee wrote, “There is nothing of cosmic importance…on the governor’s desk.”

 Brian Peterson is the president of the Grantville Action Group.
It may be true that there was nothing there that rises to the level of the fundamental question of providing water to supply Southern California sprawl, versus wrecking the ecology and economy of the Sacramento/San Joaquin Delta. Of the 700, however, there was one measure that is important statewide and locally— SB 93, which Schwarzenegger signed into law.

In January of this year Sen. Christine Kehoe (D-San Diego) introduced SB 93 to reform redevelopment in California. This is the legislative response to the settlement of the lawsuit filed by the county of San Diego against the city of San Diego to invalidate Grantville as a redevelopment project area. The most outrageous feature of the multi-faceted settlement agreement is the transfer of $31.4 million of Grantville’s property tax to the Centre City Development Corporation to pay for C Street trolley line improvements, while at exactly the same time, Centre City pays exactly same amount of money to the County to fund improvements at the County Administration Building.

As we heard in 2008 at the County’s hearing to accept the settlement agreement, this type of funneling of money is happening throughout the state. An outside legal consultant for the County,  Nancy Miller, proudly stated, “I negotiated similar agreements in Santa Clara County [and] Solano County… and I’m aware of similar type agreements.”

Grantville’s agreement evidently wasn’t the first, but it is likely the worst. The initial stop of the money transfer—the C Street trolley—is over 15 miles from Grantville. The Green Line through Grantville does not even go to downtown. You have to transfer to the Blue Line at Old Town to get to C Street. Regardless, this cannot be challenged. As things stand currently, the mere fact the City says that improving distant trolley track is a benefit to the project area, makes it so. The City never presented any evidence that the C Street trolley is vital to Grantville transportation, and they didn’t have to.

SB 93 will change that. It will mandate that if redevelopment funds are spent outside of a project area, it will only be in contiguous communities. The expenditures must also be for a demonstrable benefit to the project area. The bill will also allow for a legal challenge if the facts do not support spending redevelopment proceeds outside of the project area. SB 93 will not allow Grantville-style shenanigans anywhere else.

In making its way to the stack of bills on the governor’s desk, SB 93 unanimously passed through the Senate. It went next to the Assembly, where Assemblyman Marty Block shepherded it to a unanimous vote. Then last month, the Senate again voted unanimously, this time on the Assembly’s amendments.

We in the Grantville Action Group see the overwhelming response to SB 93 as a victory and validation for us. We long ago labeled Grantville redevelopment abusive and the settlement agreement one of the abuses. The Senate’s Local Government Committee’s analysis called the settlement “over the line.” They went further to say, “Spending over $30 million on transit and parks [County Administration Building property] projects miles outside the Grantville project area strains credibility.” Everyone in both houses of the Legislature agrees with us.

Unfortunately for Grantville, SB 93 cannot reverse the original sin—the Grantville settlement agreement’s money transfer. The only thing that can do that is the Grantville Action Group’s lawsuit to challenge the legality of the settlement agreement between the City and County.

We believe we will win the lawsuit just by comparing the facts of the settlement to the letter of Redevelopment Law. Section 33445 of the Health and Safety Code says that money cannot be transferred out of a project area to “pay for, either directly or indirectly…the construction…related site clearance, and design costs, or rehabilitation of a building that is… a city hall or county administration building.” In transferring Grantville money to C Street, and then from C Street to the County Administration Building, this is exactly what they are doing. We believe the judge will see the transparent illegality of this scheme.

Further, we believe this is an illegal negotiation of a pass-through payment out of a project area. Earlier, Senator Kehoe asked Attorney General Jerry Brown to investigate the legality of the Grantville settlement agreement. According to his office, “it appears to be technically permissible.” This analysis is based on the premise that it is Centre City’s $31.4 million going to the County. Reality, however, is that Centre City is not the source of the money, it’s only the conduit for funneling the money out of Grantville. The Attorney General even concedes it may be an illegal pass-through payment. Here again, we believe the judge will see through the scheme.

The tentative date for the Grantville Action Group, Inc. v. The city of San Diego, et al. to be in court is the end of January.  Public-interest attorney Craig Sherman, who is representing the Grantville Action Group, is still waiting for requested documents from the County. But, according to Sherman, there is enough evidence for the Grantville Action Group’s case to go to trial now.

People often ask what we hope to gain with our lawsuit. A GAG court victory would at least send the City and County back to negotiations. Minimally, it could keep Grantville’s redevelopment-generated property tax closer to home. Furthermore, the City ran away from the question of blight in Grantville by paying off the County. Ideally, for our cause, it could put the issue of blight back in court, forcing a decision. That could even stop the redevelopment project itself, because, as the Senate Local Committee says, “blight is the gateway to redevelopment.” If there is no blight, there is no redevelopment. The point is, we don’t want to be in the eminent domain crosshairs in Grantville, so they can pay for improvements in downtown.

Just before midnight Sunday, the governor agreed with the Legislature that Grantville-style money transfers are wrong. He blessed SB 93 with his signature, and it will become law January 1st of 2010. Now, only a Grantville Action Group legal victory will allow Grantville to have the same redevelopment reforms enjoyed by the rest of California.

Brian Peterson is a local veterinarian and president of the Grantville Action Group. He can be reached at friarsroadvet@sbcglobal.net
Read more: http://www.sdnn.com/sandiego/2009-10-13/blog/a-more-perfect-union/brian-peterson-grantville-inspires-victory-for-redevelopment-reform#ixzz0TrpXvhIt

Gilbert comments. While passage of SB 93 makes  it tougher for redevelopment agencies to run freely, the new criteria represents  another baby step towards our overall objective of true reform in our state.

In their last report, the state of California received  a D minus from the Institute for Justice for our meager legislation to protect  private property rights after the Kelo decision.

The only reason we did not get an F was due to  Senator Kehoe’s efforts with SB 1206, whose true reforms were mostly gutted by the state  legislature.

Although the senator and I probably disagree on numerous issues I totally commend her for her continuing efforts to fix a broken system where entrenched “special interests” such as the state’s  CRA, (CA Redevelopment Agency), and  the CA League of Cities are each powerful lobbying groups in Sacramento.