In a highly anticipated decision, the California Supreme Court ruled on December 29, 2011, that legislation adopted in July to dissolve redevelopment agencies is constitutional, but that legislation adopted concurrently to allow redevelopment agencies to remain in existence only if they transfer a portion of their revenues to other state agencies is not.

The result is that redevelopment agencies will cease to exist in California, and their assets and liabilities will be transferred to successor agencies to wind down the affairs of the redevelopment agencies, and all property tax revenues allocated to redevelopment agencies that are not necessary to discharge the existing indebtedness of the agency will be allocated as property tax revenues to other state and local agencies.