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Santa Clara County Residents to Benefit from State Dissolution of Redevelopment Agencies

More Funds to be Available for Schools, County Programs & Services, and Special Districts

SANTA CLARA COUNTY, CALIF.—Today, under the direction of the Legislature, all redevelopment agencies in California will be dissolved. In December, the California Supreme Court unanimously upheld the Legislature’s power to abolish redevelopment agencies (RDAs) statewide. This decision adopted arguments made by the 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 are prepared to take the next steps,” said President George Shirakawa, County of Santa Clara Board of Supervisors. “Although it will be awhile before we actually see useable revenue, these funds may make it possible to create jobs, as well as 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 $286 million in revenue each year being returned for local priorities. After the debts of the RDA are paid, every year a substantial $143 million 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 whittling away at programs that contribute to the overall wellbeing and vitality of the area. These reductions were necessary, in part because of the downturn in the economy, and in part, 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 for 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 put in place 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.

BACKGROUND
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 that 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; dissolves 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.

Santa Clara County Local Jurisdiction Losses to Redevelopment Agencies

Media Contact: Gwendolyn Mitchell/Laurel Anderson, Office of Public Affairs, (408) 299-5119
Posted: February 1, 2012