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CA Supreme Court Votes to Kill Local Redevelopment Agencies

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Updated 4:19 pm: The California State Supreme Court has posted a ruling in California Redevelopment Association v. Matosantos (pdf)--a lawsuit disputing the legality of ABx1-26, which dissolves local redevelopment agencies around the state, and ABx1-27, which requires RDAs to make payments to continue operating in redevelopment capacity. The court ruled, essentially, that the dissolution of the redevelopment agencies is kosher and that the "pay to play" law is not. The LA Times calls this "the worst possible outcome for" redevelopment agencies, effectively killing redevelopment agencies and ending the compromise (ABx1-27) that would have allowed them to continue operations. Earlier this year, the Community Redevelopment Agency of Los Angeles opted in to the Voluntary Alternative Redevelopment Program established by ABx1-27--saying they would pay $97 million this year and an estimated $26.5 million in subsequent years to stay up and running.

The lawsuit, filed by the League of California Cities and the California Redevelopment Association, alleged that the state violated Proposition 22, a constitutional amendment approved by voters in November 2010, which prohibits the state from raiding local tax revenue. In the opinion posted this morning, the court specifically referenced Prop. 22 as the reason for the invalidity of ABx1-27: "Proposition 22 (specifically Cal. Const., art. XIII, § 25.5, subd. (a)(7)) expressly forbids the Legislature from requiring such payments. 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."

As for ABx1-26, the court ruled that Prop. 22 does not impede the state's power to dissolve state agencies: "Assembly Bill 1X 26, the dissolution measure, is a proper exercise of the legislative power vested in the Legislature by the state Constitution. 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. Proposition 22, while it amended the state Constitution to impose new limits on the Legislature's fiscal powers, neither explicitly nor implicitly rescinded the Legislature's power to dissolve redevelopment agencies."

We're waiting on response from from the CRA/LA to find out more about what this might mean for them and their many projects around the city. Here's a list of projects they were hoping to finish when this whole dissolution thing started.

UPDATE: Mayor Villaraigosa has issued the following statement on the ruling:

“This year alone we have created more than 18,400 jobs through the Community Redevelopment Agency in Los Angeles. A proven economic development catalyst, these investments have transformed communities like North Hollywood and Bunker Hill with jobs and opportunity. Today, the court has spoken. We all must acknowledge the difficult challenge before us to create jobs, world-class schools and safe communities, keys to the future of our Golden State.

Today our schools are in a dangerous and desperate financial position. An investment in education at this pivotal time could save an entire generation, and those to come, from falling behind academically and economically. Our communities have been dealt painful state and federal cuts to public safety while many mayors face an increasing need.

I intend to work closely with leaders in Sacramento and across California to develop a responsible path forward that invests in our schools, our safety and puts the 14 million unemployed Californians back to work. This includes new legislation to provide economic tools to communities most in need.

I will invite mayors from across the state, Governor Jerry Brown, Speaker of the Assembly John Perez and Senate President Pro Tem Darrell Steinberg to meet next month to discuss a sound, long-term solution.

Many will see this decision as a set back, but I see it as an opportunity for California to step forward and responsibly invest in our future."

Downtown aerial via Photography School
· California Redevelopment Association v. Matosantos [California State Supreme Court]
· State Supreme Court upholds abolition of redevelopment agencies [LA Times]
· CA Cities File Lawsuit to Stop $1.7 Billion Redevelopment Payments [Curbed LA]