Redevelopment Agencies: Dead, But Not Buried

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In California Redevelopment Assn. v. Matosantos, the California Supreme Court sealed the demise of the state’s nearly 400 redevelopment agencies. That decision, however, leaves myriad questions unresolved for communities and developers who have invested heavily in unfinished redevelopment projects, from transit-oriented development to infrastructure projects. Further legal challenges are certain, as hundreds of millions of dollars promised to support redevelopment projects are at stake.

Governor Jerry Brown targeted funds historically earmarked for redevelopment, to be reallocated to help fill the state’s multi-billion-dollar budget deficit. In July, the legislature passed two bills: one that eliminated redevelopment agencies (A.B. 1X 26), and a companion bill (A.B. 1X 27) that allowed a city to “reconstitute” its redevelopment agency, provided it “voluntarily” makes payments to schools and special districts — $1.7 billion this fiscal year and $400 million for subsequent years. The California Redevelopment Association and League of California Cities challenged both laws, alleging that each on its face violates the state constitution and Proposition 22, a 2010 voter-approved law that limits the state’s ability to require payments from redevelopment agencies.

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