Rulings go against Calif. redevelopment agencies

Bryan Cohen Dec. 29, 2011, 2:00pm


SAN FRANCISCO (Legal Newsline) - The California Supreme Court upheld the constitutionality of Assembly Bill 1X 26 and struck down Assembly Bill 1X 27 on Thursday, resolving challenges filed by multiple organizations and cities.

On July 18, the League of California Cities and the California Redevelopment Association filed a petition asking the court to overturn both Assembly Bill 1X 26 and Assembly Bill 1X 27. The court agreed to hear the lawsuit on Aug. 11 and issued a partial stay of various provisions of both bills and to issue a decision before Jan. 15. The court expedited arguments and briefings on the matter and held oral argument on Nov. 10.

Assembly Bill 1X 26 dissolves redevelopment agencies and redirects their property tax revenues. Assembly Bill 1X 27 would allow redevelopment agencies to continue to operate if they opted in on a plan requiring annual payment.

In the majority opinion authored by Associate Justice Kathryn M. Werdegar, the court upheld the enactment of Assembly Bill 1X 26, explaining that because the legislature had the authority to create redevelopment agencies, it also had the corollary power to dissolve them.

"Assembly Bill 1X26, the dissolution measure, is a proper exercise of the legislative power vested in the legislature by the state constitution," Werdegar wrote.

"That power includes the authority to create entities, such as redevelopment agencies, to carry out the state's ends and the corollary power to dissolve those same entities when the legislature deems it necessary and proper."

The court noted that even though Proposition 22, as enacted by the voters in 2010, amended the state constitution to impose added limits on the state's fiscal powers, nothing in the initiative or in other parts of the state constitution guaranteed the continued existence of redevelopment agencies.

The majority held that Assembly Bill 1X 27 was unconstitutional because it conditioned the ability of redevelopment agencies to conduct new business on agreement to a yearly payment plan based on a portion of property tax revenues allocated to redevelopment agencies. The court explained that the opt-in plan violated Proposition 22 because that measure arose to oppose similar past legislation and was intended to prevent further required payments based on redevelopment agency property tax revenues.

The majority opinion by Werdegar was signed by Associate Justices Goodwin Liu, Carol A. Corrigan, Ming W. Chin, Marvin R. Baxter and Joyce L. Kennard. Chief Justice Tani Cantil-Sakauye joined the majority opinion that upheld Assembly Bill 1X 26, but dissented with respect to the conclusion that Assembly Bill 1X 27 was unconstitutional.

Cantil-Sakauye said that neither Proposition 22's history nor its express language appeared to prohibit the opt-in payment plan created by Assembly Bill 1X 27. The dissenting opinion noted that it seemed the legislature had carefully drafted Assembly Bill 1X 27 to not violate Proposition 22 by allowing the annual payment to come from any local revenue source and not exclusively redevelopment agency funds, which Proposition 22 expressly protects. Cantil-Sakauye concluded that Assembly Bill 1X 27 does not facially conflict with the constitution of the state, adding that the parties presented no evidence that the measure would actually violate the state constitution in practice.

The court unanimously reformed Assembly Bill 1X 26, which had been largely stayed while the action was pending, by extending its multiple deadlines by four months.

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