Court Rules to Eliminate California Redevelopment Agencies

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The Ruling -

As 2011 drew to a close, the California Supreme Court struck a fatal blow for California’s redevelopment agencies. In upholding Assembly Bill X1 26 and striking down Assembly Bill X1 27 in California Redevelopment Association v. Matosantos, S194861, the Court eliminated all four hundred California redevelopment agencies (RDAs) and started a process to transition all existing projects and obligations to other agencies.

The two laws were part of Governor Brown’s budget deficit solution approved in June, 2011. AB X1 26 would eliminate California RDAs by denying them the ability to borrow, acquire property and adopt or amend redevelopment plans, among other things. AB X1 27, however, would then allow RDAs to continue to exist, if the cities and counties that created them “voluntarily” agreed to make payments to benefit State schools and special districts. The total amount of these payments for the 2011-2012 fiscal year would be $1.7 billion, with $400 million to schools and special districts in subsequent budget years.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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