The state Legislature on Wednesday gutted redevelopment, the system responsible for three decades of San Diego’s big building aspirations and neighborhood revitalization attempts.

The decision throws just about every one of San Diego’s current and future plans into doubt.

It menaces the viability of major legacy projects, such as a new downtown Chargers stadium or expanded Convention Center, by pulling a large chunk of their funding. It messes with the city budget, passed last week in part by relying on redevelopment money to close a deficit. And it threatens the city’s plans to direct $4 billion future property tax dollars to projects over the next 35 years.

But schools could receive about $40 million that otherwise would have stayed in downtown redevelopment coffers. At some point, it could provide the city’s starving day-to-day operating budget with a property tax boost. The source of some of San Diego’s most significant recent scandals could disappear.

For now, no one seems to understand exactly what the Legislature did or how the city will fare. The lawyers are expected eventually to sort all that out.

“Once we start seeing the details,” said City Attorney Jan Goldsmith, “we’ll find out if it’s really dead or not.”

It’s an amazing state of affairs given the hundreds of billions in future property tax dollars affected by Wednesday’s decision. Beyond the simple vote, little else is clear.

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Governor Jerry Brown, who kicked off the titanic debate over redevelopment’s future six months ago, still needs to sign the legislation. Lawmakers passed the state budget Wednesday and are counting on the $1.7 billion in property taxes statewide that otherwise would have gone to redevelopment agencies to balance their books.

The Legislature also passed a companion bill that would allow cities to re-create their redevelopment agencies provided they pay a considerable amount of their property tax dollars to local schools. Lawmakers expect at least $400 million from redevelopment agencies in future years.

This new version of redevelopment isn’t redevelopment at all to the system’s supporters.

“The Senate and the Assembly just voted to kill redevelopment plain and simple,” said John Shirey, head of the California Redevelopment Association.

Redevelopment funnels billions of property taxes away from schools and other local governments to improve rundown neighborhoods.

It’s a little understood process, but vital to how city leaders have long decided to pay for their bricks and mortar projects. The process is even less understood when the Legislature reveals and passes a bill with gargantuan effects in a day, as it did Wednesday. Goldsmith said Brown’s original convoluted legislation was clearer than what eventually passed.

Redevelopment’s high stakes provoked chaos during the unusually quick state budget hearings.

Capitol reporters described the army of lobbyists amassing to watch the redevelopment debate. A fight broke out on the Assembly floor over a legislator’s Mafia reference during discussion. San Diego Mayor Jerry Sanders issued one of his most incendiary statements in recent memory after the bills passed, calling the decision an “extortion attempt.” Alternative measures he and other big city mayors proposed could have reformed redevelopment, he said.

“Instead, the Legislature put a gun to our head, threatening to kill redevelopment agencies if they don’t hand over local tax dollars to the state instead of using them for streets, parks, housing and other local needs,” Sanders said.

These dollars also are central to the two big projects Sanders wants to complete by the time he leaves office at the end of next year.

A Chargers official has said the downtown stadium was “dead” if redevelopment went away. Last month, Sanders unveiled a Convention Center expansion financing plan that still needs a big cash infusion from somewhere. Downtown redevelopment dollars have long been rumored as a source. At the least, Wednesday’s decision could tie up redevelopment funds for a while.

Assuming the governor signs the legislation, the fight will turn to the courts.

Redevelopment backers have argued for months that killing the system violates a voter-approved initiative designed to keep the state from taking redevelopment dollars. The state likely will go after the attempts by San Diego and other local governments to commit billions to redevelopment projects so the state couldn’t take the money away. The city tried to obligate $4 billion for future redevelopment projects and transferred its redevelopment agency assets to the city. No one knows what will happen to the money during the lawsuits, but Shirey said he expected the state would try to take control.

“The next phase here is litigation,” Shirey said, adding that redevelopment agency employees should watch the lawsuits closely.

“Your future is going to hinge on that.”

Please contact Liam Dillon directly at or 619.550.5663 and follow him on Twitter:

Liam Dillon

Liam Dillon was formerly a senior reporter and assistant editor for Voice of San Diego. He led VOSD’s investigations and wrote about how regular people...

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