After months of speculation, Judgment Day has arrived for the fate of redevelopment agencies, as this morning the State Supreme Court ruled that the abolishment of agencies is a “proper exercise of legislative power,” thus the agencies can be permanently dissolved.
It will be recalled that under budget-balancing bills approved by Gov. Brown, agencies had to fork over a ransom payment of $1.7 billion if they wanted to survive and $400 million thereafter. In a split decision, the court has upheld AB 1X 26 and has invalidated AB 1X 27.
With respect to the latter bill, the ruling reads:
“Prop. 22 expressly forbids the Legislature from requiring such payments. Ana Matosantos's argument that the payments are valid because technically voluntary cannot be reconciled with the fact that the payments are a requirement of continued operation. Because the flawed provisions of Assembly Bill 1X 27 are not severable from other parts of that measure, the measure is invalid in its entirety.”
On its decision to uphold AB 1X 26, the court wrote:
“What is apparent from the constitutional provision's text is confirmed by its history. The ballot materials provided to the voters gave no hint that the proposed amendment was intended to make redevelopment agencies or tax increment financing a permanent part of the government landscape. Rather, consistent with the text's use of the permissive — may, the Legislative Counsel explained that the proposed amendment was intended simply to —authorize-but not require-the Legislature to provide for tax increment financing for redevelopment.”
The outcome clearly not only has substantial implications for the state budget but also the status of over 400 local redevelopment agencies. It is unclear what timeline will be established for the shutdown of RDAs.
