Is it the End of the Story for Redevelopment in California?

Fantasy land

Long, long ago (in 2012 to be exact) in a land not so far away (also known as California), legislation which allowed local governments to establish redevelopment agencies tasked with eliminating blight through the development, reconstruction and rehabilitation of residential, commercial, industrial and retail districts were abolished.

Note: For a relatively concise history of redevelopment in California see the U.S. Department of Housing and Urban Development’s working paper Redevelopment Agencies in California: History, Benefits, Excesses, and Closure (January 2014).

A quite war has been waged ever since. Cities, community development commissions, successor agencies to redevelopment agencies, nonprofit housing corporations and individual taxpayers have fought the legislation (AB 1X 26 (Blumenfield 2011)) which eliminated California’s 425 redevelopment agencies, principally, on constitutional grounds.

It’s been a losing battle.

In 2011, the California Supreme Court upheld AB 1X 26 finding that the legislation was a constitutional and valid exercise of the Legislature’s power, and struck down related legislation (AB 1X 27) which would have permitted redevelopment agencies to continue to operate under certain conditions.

More recently, this past month, in City of Cerritos v. State of California, Case No. C070484 (August 25, 2015), the California Court of Appeals for the Third District upheld a trial court’s denial of a preliminary injunction sought by opponents of AB 1X 26  seeking to enjoin the legislation on alternative constitutional grounds not considered by the California Supreme Court.

But the story line may be changing.

When Governor Brown signed AB 1X 26 in 2011, the Governor was trying to plug a $25.4 billion deficit in the state’s general fund, on one hand, while increasing funding to state schools who were sharing property tax revenues with redevelopment agencies, on the other.

Since then, however, California has seen a turnaround. For the second year in a row, California has seen budget surplus, this time a $6.8 billion surplus for fiscal year ending June 30, 2015.

And earlier this month, Governor Brown signed a trio bills which may suggest that redevelopment has regained favor in the eyes of the Governor. AB 2 established new revitalization districts, AB 313 expands infrastructure financing districts, and SB 107 which streamlines the dissolution of redevelopment agencies.

So is it the end of the story for redevelopment in California?

Perhaps not.



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