11-0118_STROSCHER G3 LLC_E1_Correspondence (2) Maria Morris GRA, 111812011
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From: Tony Cardenas [mai Ito,tcardenas# adbe-5 o� .
Sent. Tuesday, January 18, 20112:14 PM
To: Tony Cardenas
Subject: State Budget UPDATE (Ian. 18)
Orange County Division.Members,
The 2011 legislative session has barely commenced, and local redevelopment agencies are already being
targeted to balance the State budget. This is no longer just a$2 billion raid,the Department of Finance is
proposing the outright decimation of all statewide redevelopment agencies for good.
The League of California Cities strongly opposes this proposal, and is launching a statewide advocacy
campaign to stop it. Here's how your city can help:
1.) Coalition Letter to Governor Brown—We're asking local elected officials to add their name to a letter
the League is sending to Governor Brown stating its opposition to the elimination of redevelopment
agencies. The letter is attached for your review.
Can you please forward the letter to your city's elected officials, and ask for their approval to sign
on? We don't need a hardcopy/electronic signature, all we need is authorization to list them as opposed
to the redevelopment proposal. If your city already has pre-existing policy opposing
local/redevelopment raids, this request will be easy to accomplish.
Please email me the names of those elected officials that have agreed to sign on as soon as you receive
their approval.
2.) Projects Bein_g Shut Down. if Redevelopment Agencies are Eliminated—I'm tabulating a list of
projects that will be shut down, slowed down or impacted due to the elimination of redevelopment
agencies. The goal is to have a countywide list of projects to provide to the media during a forthcoming
press conference.
If your agency has such projects (infrastructure; housing, downtown revitalization etc.), please send me
a brief email listing those projects. I will be following up directly with your agency's Redevelopment
Director; having a list of projects will help me in asking for more information from your staff.
The more attention that is brought to the local economic impact of the job losses resulting from the
elimination of redevelopment agencies,the better our chances will be to stop such a proposal from
moving forward.
3.) Press Conference and Media Outreach—Press conferences are being set up statewide to bring
attention to the redevelopment elimination proposal. The tentative date for an Orange County press
conference is Wednesday, January 26 at 11:00 a.m. I'll be following up with your city local elected
officials asking for their participation in a press conference. I will also be coordinating participation
from OCBIA's builders/developers, chambers of commerce and labor/trade unions.
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In addition, newspapers are already covering the redevelopment elimination proposal; here's an article
that ran in the Orange County Register covering impacts to Buena Park: Newspaper Article.
I encourage your city to continue to reach out to the local media, and make them aware of the local
impacts. Attached are some suggested talking points that can be utilized.
It's not a surprise that local government is being targeted once again to balance the State budget. What is a
surprise is the sheer speed of such a proposal in light of the 61%voter-approved Proposition 22. The
redevelopment elimination proposal has not yet been put in writing, which is business as usual for
Sacramento. Once a bill exists, I will send it out to our member cities so that letters of opposition can be
drafted.
Thanks for your assistance on this important matter, happy New Year.
TONY CARDENAS
Public Affairs Regional Manager
Orange County Division
League of California Cities
(714) 425-5558
Tcarde nasCa;eaciVes.e+rg
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'C 1400 K Street, Suite 400 • Sacramento, California 95814
N= Phone: (916)658-8200 Bax: (916)658-8240
www.cacities.org
Honorable,ferry Brown
Governor, State of California
California State Senators
California State Assembly Members
State Capitol
Sacramento, CA 95814
January 18, 2011
Dear Governor Brown and California State Legislators:
RE: Eliminating redevelopment is wrong decision in this economy and fails to offer a real
solution for the state budget
As elected city officials in the State of California,we fully understand that the State's massive budget deficit
will require sacrifice by all Californians.We stand ready to work with the Administration and the Legislature to
pass an honest budget that finally puts California on the road to fiscal health. However, it is important to
ensure that no decisions are made in the frenzy of the upcoming budget deliberations that will make our
financial problems worse.
Unfortunately, the Administration's proposal to abolish redevelopment represents more of the same State
raids of local funds that voters have fought to prevent, and it will jeopardize the State's prospects for an
economic recovery.
The Governor's proposal to eliminate redevelopment agencies is wrong because it:
• Will not provide expected budget relief to the State or local governments after bond and contractual
obligations are repaid;
• Will destroy billions of dollars in local economic activity and hundreds of thousands of jobs;
• Will kill the State's only meaningful programs to provide affordable housing; and
• Will block our efforts in California to grow responsibly by focusing on urban and infill development.
The proposal will not provide budiciet savincls to the State or local governments, and represents
continued State raids of local funds the voters have acted to prevent.
Over the last 10 years, the State has adopted too many budgets based on proposals that are at best
questionable and in some cases illegal. The proposal to eliminate redevelopment agencies is just another in
a long string of proposals that will not deliver the real dollars needed to close the budget gap and put the
State's fiscal house in order.
The measure is completely contrary to Proposition 22, which passed by 61 percent in November 2010, to
protect local government revenues from grabs by the State, The provisions of Prop. 22 clearly prohibit the
redevelopment proposal as it appears in the governor's budget.
Second, redevelopment agencies issue bonds to finance redevelopment activities, which must be repaid with
interest. Redevelopment agencies currently hold more than $20 billion in bonded indebtedness. Under the
federal and state constitutions, these contractual obligations must be met before revenues could be used
under the Governor's proposal to benefit the state's budget deficit.
The bottom line is that this is not a"real" budget proposal. It is a proposal that will once again fall far short of
expectations.
The proposal will kill lobs and economic expansion at the worst possible time.
Eliminating redevelopment will have a.direct and lasting negative impact on the California economy and job
creation.
• Redevelopment activities support an average of 304,000 full-and part-time private sector jobs in a
typical year, including 170,600 construction jobs;
• Redevelopment contributes over$40 billion annually to California's economy in the generation of
goods and services;
• Redevelopment construction activities generate $2 billion in state and local taxes in a typical year;
and
• The success stories of redevelopment are all over California and available for all to see. The
downtown areas of San Diego, Pasadena, Los Angeles and San .lose stand as outstanding
examples of saving blighted neighborhoods and turning them into hubs of economic activity and job
creation.
The proposal is bad for the environment bad for our state.
Eliminating redevelopment will take away the primary tool local governments have to comply with the
requirements of State law to plan for more compact urban development supported by improved public
transportation opportunities. Redevelopment encourages infill development rather than Greenfield
development and redevelopment agencies have the experience and tools needed to help implement AB 32
and SB 375.
Redevelopment is also the second largest funder of affordable homes after the federal government.
More than 98,000 units of affordable housing have been constructed or rehabilitated through redevelopment
since 1993.
As local officials, we stand ready to assist you in the passage of a responsible budget. However, this
proposal runs completely contrary to the Governor and Legislature's stated goals of realigning state services
to provide more responsibility and funding locally. We strongly urge you to reject this measure and refocus
on proposals that offer real solutions to California's budget problems.
Sincerely,
STOP THE STATFS REDEVELOPMENT PROPOSAL
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As part of its 2011-12 budget proposal, the Administration has proposed permanently shutting
down local redevelopment agencies. This proposal represents more of the same misguided
and illegal State budget raids of local government funds that voters have repeatedly sought to
end. It will bring little financial benefit to the State, but will permanently destroy hundreds of
thousands of jobs, billions in local economic activity and a key local tool to meet the state's infill
land-use objectives. A broad coalition of mayors, council members, local governments,
business and labor, environmental leaders and affordable housing advocates oppose the
State's attempt to kill local redevelopment. Here's why:
Proposal Represents More the Saes State Raids of Localvnds that
Voters av Repeatediy _ ndrwhek in Acted to Stop.
• The proposal to kill redevelopment represents the same old budget tactics of raiding local
government funds to solve the State's budget problems.
• In November, more than 5.7 million voters, a resounding 60.7°/x, voted to pass Prop. 22, to
stop the State from taking, borrowing or redirecting local government funds - including local
redevelopment.
• Cities and local governments want to work with the State as partners to balance the State
budget and in the important effort to realign services to the local level. But this proposal
creates a toxic environment that city and other local government officials have no choice but
to oppose.
No Mnancial Gain, Significant Ecom is Pain,
■ The State's own numbers show that killing redevelopment will bring very little financial relief
for the State. In fact, after this budget year, the State Department of Finance acknowled es
zero State savings from shutting down redevelopment. Redevelopment agencies have more
than $20 billion in bond and other contractual obligations that legally must be repaid before
revenues are available to any other purpose.
■ However, killing redevelopment will cause serious and permanent economic damage
at the local level. Redevelopment activities:
o Support 304,000 iobs annually, including 170,600 construction jobs.
o Contribute over 0 billion annually to California's economy in the generation of
goods and services.
o Generate more than 2 billion in state and local taxes in a typical year.
-- More --
Protect Local Jobs and the Economy-Stop the State's Proposal to Abolish Redevelopment!
1121 L Street,Suite 803,Sacramento,CA 95813.916.4410872
Proposal Will yip Out a Vital Tool to Meet 3t t"HE, Land-Use OctiN. H
o Develop Affordable Roue , .
■ Eliminating redevelopment will take away one of the few tools local governments have to
comply with state requirements to plan for more compact urban development supported by
transit-oriented development, housing,jobs and infrastructure. Redevelopment agencies
have the experience and tools needed to help implement the requirements of AB 32 and SB
375.
■
Redevelopment is also the second largest funder of affordable housing, behind only
the federal government. Over 98,000 units of affordable housing have been constructed or
rehabilitated since 1993. Twenty percent of property taxes generated from redevelopment
activities must be spent on affordable housing.
Proposal is Unconstitutional and P lfficafl Uni .
• Shutting down redevelopment agencies is a clear violation of multiple State constitutional
provisions, including Article XVI, section 15 which requires tax increment to be paid to
redevelopment agencies to repay the public cost of redevelopment projects and Article XIII,
section 25.5 (Proposition 22 -- passed just last November)which explicitly prohibits the
State from taking tax increment from redevelopment agencies.
■ Additionally, killing redevelopment could violate the U.S. and California constitutions which
prohibit impairment of contracts. Redevelopment agencies have more than $20 billion in
contractual bond obligations, and have entered into tens of thousands of contracts with
banks, developers and bond houses. The Legislature cannot constitutionally abrogate those
contracts or unilaterally substitute a new party to replace the redevelopment agency without
the consent of the other parties to the contract.
■ Jeopardizing these contractual obligations will shake investor confidence and the
creditworthiness of the State and increase state and local bonding and borrowing costs for
years to come.
• Lastly, the Administration's proposal is simply unviable —shutting dawn 398 agencies, more
than 700 project areas, hundreds of thousands of jobs and billions of dollars in contracts and
economic commitments is an ill-advised and politically untenable prospect.
Protect Local Jobs and the Economy—Stop the State's Proposal to Abolish redevelopment!
1121 L Street,Suite 803,Sacramento,CA 95813 0 916.443.0872