Governor Signs Law Eliminating Redevelopment in California
Posted in Redevelopment

For months, we've been reporting on the impending death of California's redevelopment agencies.  Even we had started to feel like the "boy who cried wolf" as we reported on iterations of the Governor's budget plan that didn't come to fruition. 

But this time, it's real.  Along with an overall budget package, this week the Governor signed into law ABX1 26 and ABX1 27.  ABX1 26 eliminates redevelopment agencies in California.  ABX1 27 provides a means of survival if the agencies will pay the state, collectively, $1.7 billion next year (the savings the Governor claims ABX1 26 would generate by eliminating the agencies), along with additional payments every year thereafter. 

Of course, with a story that has as many twists and turns as this one, things are never simple.  First, and most obviously, with ABX1 27 in the mix, redevelopment could potentially survive after all -- assuming the agencies make the required payments.  At this point, it is not clear how many redevelopment agencies would, or even could, make the mandatory payments to allow their survival.  

Perhaps more importantly, the battle now turns from the political arena to the courtroom.  The CRA and League of Cities have already promised a major legal campaign designed to prove the unconstitutionality of the new laws.  And this fight will likely commence with an immediate showdown over an attempt to secure an injunction that will prevent the new laws from taking effect.

As the story evolves, we'll keep you up to date.  In the meantime, there's a pretty good summary of where we stand in Thursday's Sacramento Bee.  The article by Judy Lin,  Redevelopment Change Likely Headed for Court Fight, contains quotes from both sides of the debate.  As just two examples:

Chris McKenzie, president of the League of California Cities, is quoted describing the laws as follows:
"The governor provided the elimination bill," McKenzie said. "What the Democrats did is they added a gun-to-your-head provision. The second [bill] said, Oh, but if you pay the extortion - the $1.7 billion - you won’t be eliminated.’"

The League has also issued a statement decrying the new laws

Assembly Speaker John Perez's response was more restrained and succinct: 

We’re confident that it’s legal and we’re confident that reform is necessary.

Finally, though not about redevelopment, Amazon.com announced that it plans to fight back against another of the Governor's budget provisions, this one, a requirement that Internet retailers collect sales tax.  According to a June 30 Los Angeles Times article, Amazon won't collect sales tax; cuts off California affiliates, Amazon "terminated its relationship with approximately 10,000 Internet business partners in California" because "it does not intend to comply with the new law." 

Undoubtedly, more fireworks await us all as we head into the July 4th weekend. 

  • Rick E. Rayl
    Partner

    Rick Rayl is an experienced litigator on a broad range of complex civil litigation issues.  His practice is concentrated primarily on eminent domain, inverse condemnation, and other real-estate-valuation disputes.  His public ...

California Eminent Domain Report is a one-stop resource for everything new and noteworthy in eminent domain in California. We cover all aspects of eminent domain in California, including condemnation, inverse condemnation, and regulatory takings. We also keep track of current cases, project announcements, budget issues, legislative reform efforts, and report on all major California eminent domain conferences and seminars.

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