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CA Supreme Court Upholds RDA Dissolution

California’s Supreme Court unanimously upheld the state legislature’s dissolution (AB1X 26) of California’s redevelopment agencies (RDAs).

“The legislative power vested in the Legislature by the state Constitution,” said Justice Kathryn M. Werdegar writing for the majority, “…. includes the authority to create entities, such as redevelopment agencies…and the corollary power to dissolve those same entities when the Legislature deems it necessary and proper.”

The California Redevelopment Association’s lawsuit claimed that 2010’s Proposition 22 bars the state legislature from redirecting RDA funds for state uses, and, once created, RDAs cannot be dissolved by the legislature. Further, the suit asserted that RDAs and sponsoring communities cannot be required to make payments to funds benefiting schools and special districts as a condition of continued operation.

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At the same time, the court struck down the “dissolution exemption with special payments” scheme (1X 27) because “the condition the measure imposes is unconstitutional.” Chief Justice Tani Gorre Cantil-Sakauye was the lone dissenter on that ruling, saying that “…nothing in Assembly Bill 1X 27 compels community sponsors to violate Proposition 22.”

In its ruling, the court extended for four months deadlines and effective dates in the dissolution law (AB1X 26) falling before May 1, 2012.

Santa Clara officials are evaluating the implications for the city. “It’s not as if this ruling was unanticipated,” says City Attorney Ren Nosky. The city took a number of steps earlier this year to protect RDA assets by transferring them to other municipal entities. However, the dissolution law lets the state controller authority review – and revoke – RDA asset transfers and debt issues back two years.

One project, however, that’s not likely to be significantly affected by the ruling is the proposed 49ers football stadium. That’s because the city – not the RDA – owns that land, and the RDA money committed to the project was allocated long before AB1X 26 was passed, according to Nosky.

To read the court’s ruling, visit www.courts.ca.gov/opinions-slip.htm and select

“Cal. Redevelopment Assoc. v. Matosantos 12/29/11.”

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