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December 30, 2011
California's RDA ruling could affect A's, 49ers, Chargers stadium plans
As if the umpteen stadium and arena battles ongoing in California needed more drama, the state's supreme court handed down this yesterday:
The court ruled unanimously in favor of a state law passed last summer that abolished redevelopment agencies and voted 6 to 1 to strike down a companion measure that would have allowed the agencies to continue if they shared their revenues.
More than 400 redevelopment agencies will cease to exist after Feb. 1. Authorized by law since 1945, the agencies have been responsible for such success stories as Old Pasadena and San Diego's Gaslamp Quarter but also plagued by projects that some argued had little public benefit.
First, some brief backstory: After Gov. Jerry Brown declared his intentions earlier this year to stop allowing city redevelopment agencies to siphon off property tax proceeds for local development projects, the state legislature offered a compromise of sorts: If RDAs would cut the state in on a share of the boodle, they'd be allowed to continue. Yesterday's court ruling struck down that deal, saying that while the state could shut down RDAs it couldn't attach strings to them; and so, as of a month and two days from now, all RDAs will cease to exist. (Ironically, the court was ruling on a lawsuit filed by a bunch of cities and their RDAs, which were trying to knock down only the piece of legislation that would eliminate RDAs, not the one that would allow them to continue. Whoopsie.)
This is big news for the sports world because, as you might imagine, cities have been thrilled to hand out development dollars when it's not really their money they're spending. (While technically RDA spending is just a straight-up TIF — any new tax revenue gets diverted to pay for the project — in practice, at least according to Brown, the state has ended up filling the gaps in school spending and other local services that have resulted.) So pretty much every sports construction project now underway or in the planning stages in California has involved RDAs, which means many of them may now be in jeopardy.
A quick scorecard, from north to south:
- Oakland's Victory Court plan for an A's stadium appears to now be out the window, since that relied on an RDA-based TIF. However, its second "Coliseum City" plan for the A's and Raiders could still move ahead, according to Newballpark.org, as Oakland's existing stadium site is "part of a separate joint-powers agreement which allows the Coliseum Authority to raise money for its own projects."
- Any thoughts of moving the Golden State Warriors to a new arena in San Francisco will likely be hampered by the ruling.
- Santa Clara's stadium funding was thought to be already in place — barring a last-minute petition drive — but $40 million of that was supposed to come from the city's RDA, which now must turn it over to the state instead. (I'm not clear on what happens to the $4 million the city RDA already pre-paid to the 49ers last March.) That's not a huge sum to be made up on a $1 billion project, but given how the whole financing plan is already held together by spit and baling wire, you never know what could turn out to be its striped bass.
- San Jose's RDA already completed its part in the city's proposed A's stadium plan, giving team owner Lew Wolff an option to buy RDA-owned land for the project last month. Yet a lawsuit filed earlier this month by the Giants-funded Stand For San Jose charges, among other things, that San Jose illegally jumped the gun by agreeing to sell the land before going before a public vote; if a court agrees, then San Jose could be forced to go back and hold a referendum before selling the land — except at that point the RDA would no longer exist to do the sale.
- AEG's downtown Los Angeles football stadium project would use a TIF, but it seems that it's one that doesn't require an RDA. (I think this is because rather than actually redirecting the money, the city would just be totaling up the new tax benefits and hoping they're enough to pay off the stadium bonds, but don't quote me on that.) Still, this could give a minor boost to Ed Roski's City of Industry stadium plan in the race for first place among L.A. stadium plans that don't have a snowball's chance in hell of getting approved by the NFL or attracting an existing team owner.
- The San Diego Chargers, whose stadium chief previously said that without RDA money, their stadium plans are "done, finished," are indeed completely hosed. But they kind of knew that already.
In any case, before anyone gets too excited about it being a new day in Baltimore, the state legislature — which, you'll recall, started off this whole mess by trying to save RDAs while reclaiming a share of their money — can always pass new legislation reestablishing some form of local redevelopment agencies. This being the California state legislature, of course, that will inevitably be a long and painful process — which is why I told the San Diego Union Tribune that my prediction is for "gridlock," as team owners wait to see how the new world order shakes out.
The interesting bits here in the short run will be how the 49ers (and, if necessary, the A's) handle the potential new speed bumps in their stadium campaigns. More news to come in the new year, I'm sure.
We've always been promised that there will be 'no cost to Santa Clara's General Fund' and that the RDA would reimburse the city for all of the staff time/salaries spent on the stadium project. So this is yet another hidden cost to the citizens here - we have monthly employee furlough days and cutbacks in services such as library closure days yet the staff spend oodles of time on the stadium project.
Posted by SantaClaraTaxpayer on December 30, 2011 12:20 PM
Well, Neil, this seems like good news for taxpayers on the surface. However, one suspects that the same kind of back room dealings that lead to the present situation will continue... and that something not named RDA may arise to replace the now defunct RDAs.
If nothing else, though, even gridlock in California might lead some out of state teams to accept more modest "local" solutions than would otherwise have been the case.
Posted by John Bladen on December 30, 2011 02:10 PM
I wouldn't count on it. The big in state venue that was going to effect out of state teams was the LA one. And the AEG stadium is largely unaffected by the ruling since the development itself isn't tied into RDA related TIF. And Roski's stadium itself remains unaffected as well (though his ancillary development did require some RDA funding). But on the whole the LA situation is not affected which means LA remains status quo as a move threat for the teams already identified as potential move targets.
The big impact this really had was on the Raiders and Chargers. Both of their stadium plans in their current cities were counting on RDA for major portions of the ancillary development around the sites. While the Coliseum Authority could still potentially raise money independently in Oakland as Neil points out, the city was also counting on the $250 million in redevelopment funds they had to build the "city" portion of the Coliseum city around the football stadium/arena/ballpark. Now they've lost not only that, but they still have yet to determine how they'd actually raise the funds for one or more of the 3 venues they want to build. The whole project was a pipe dream to begin with but now it's become even less likely... Which has got to make the Niners happy because now they'll likely get to take the Raiders on as a tenant further helping them pay for the Santa Clara stadium and plug the small 40 million dollar hole that may open up if that money is not protected as an "existing contract."
Posted by Dan on December 30, 2011 03:12 PM
I think it harms the Kings, too:
www.sacbee.com/2011/12/30/4152317/california-supreme-court-hands.html
AEG and the Maloofs were hoping to set up a "sphere of influence" near the arena, partly funded by RDA money. With that RDA money gone, David Taylor is less interested in the project. David Taylor is Sacramento's RDA money hog.
You should see the stupid bars Taylor set up on K Street with RDA money. A mermaid bar... Your tax dollars at work.
Posted by MikeM on December 30, 2011 04:13 PM
This decision does not effect the Chargers as much as one would think. The team was only seeking $150 million in redevelopment funds in order to prep the building site. A site that currently houses a homeless population in tents and shopping carts, an old brick building and an MTS bus depot -- the latter of which would have to be relocated and the gasoline and oil pollution caused by it, cleaned up. The Chargers, knowing how California operates, have been proceeding with financial options under the assumption they didn't receive redevelopment money for some time now. So this decision only confirms what they had been planning for for months.
Posted by Steve C. on December 30, 2011 04:31 PM
It's a little more complex than you make it Steve. That "old brick building" is not only a historical landmark, but it also contains several businesses, as do some of the surrounding buildings that would have to be removed. And those businesses will have to be bought out and compensated heavily for the move. The "brick building" in particular houses Mission Brewing which have an iron clad long term lease on the property that is going to have to be bought out in full before they'll agree to move and according to them they won't be bought off cheap.
Posted by Dan on December 30, 2011 04:45 PM
@John Bladen - this is really good news for taxpayers in that property taxes in the RDA areas will gradually start to flow to schools/cities/counties just as they do in non-RDA areas. Through time our starved school/city/county budgets here will see more money.
San Jose's RDA alone has been bleeding the schools and the county out of tens of millions of dollars or more every year for decades. The County was on Gov Brown's side of this lawsuit because the San Jose RDA owes the county huge amounts of money.
Neil - I loved your 'Whoopsie' comment.
Posted by SantaClaraTaxpayer on December 30, 2011 09:15 PM
I really hope this hinders or stops the 49ers' machinations.
Posted by Eric on December 30, 2011 10:02 PM
Eric - if you live in Santa Clara, see
santaclaraplaysfair dot org
for information on where to go to sign the petitions. Signatures are being gathered to bring the Disposition and Development Agreement to a vote because the $850 million in loans from the Stadium Authority for stadium construction were not included in the stadium ballot measure.
Had those loans been included, there's no way the ballot measure could have passed.
There is no legal requirement in CA for cost disclosure on city-wide ballot measures, which allowed the pro-stadium council members to leave the SA portion of the construction costs off of the ballot.
Please pass on the website address to everyone you know in Santa Clara.
Most Santa clara residents support the 9ers stadium, even with the 850 mil in loans, as we would recover that money with interest in 30 years.
This signature campaign is a waste of time, and does not reflect the true spirit of majority Santa clara residents. The indirect job opportunities the stadium plan brings, is too good to be true. Please stop this fake campaign.
Sam,
The indirect jobs the stadium brings is very minimal. The risk of backstopping the loans is very large in such a small city.
The vast majority of residents voting on J had no real idea about what they were voting on. That was why the 49ers funded the massive misinformation campaign.
There's nothing "fake" about the signature gathering. If a future ballot measure is more fairly written--disclosing costs/risks--and people start connecting dots--the York's aren't their friends, even if players visit schools--then it may be possible that a re-vote will have a different result.
Posted by santa clara jay on December 31, 2011 03:53 PM