The Redevelopment Wind-Down: A Quick Update
Posted in Redevelopment

California continues its process of dismantling its redevelopment infrastructure.  The state's redevelopment agencies disappeared on February 1, 2012, and today marks another key milestone.  May 1 is the deadline for the creation of the Oversight Boards that will watch over the Successor Agencies as they dispose of redevelopment assets. 

What does this mean?  In many cases, nothing particularly significant.  Oversight Boards have been empanelled for many Successor Agencies before today, and even once empanelled, there is no guarantee that anything will happen immediately.  But theoretically, Successor Agencies can start to dispose of assets, with Oversight Board approval. 

There are a few other things going on, and some acronyms to talk about.  Here are a few highlights:

Recently, we saw the first lawsuit generated by the winding down process (at least , the first one we noticed).  The City of Fresno has sued over the make up of its Oversight Board, arguing that the Board has not been created in compliance with AB X1 26.  An April 23 article in the Fresno Bee, Fresno Oversight Board members sued at chaotic meeting, opens with this colorful quote:

The Fresno Oversight Board got two pieces of bad news when it met Monday for the first time.

Board members were told they don't exist.

Then they got sued -- by their own legal advocate.

A Sacramento County judge later ruled that the Board could meet -- for now -- but ordered the parties to return to court for a substantive hearing on the Board's makeup on May 14.  

And while the successor agencies and their Oversight Boards try to sort through the process, there are continued efforts in the Legislature to amend the law.  There have been a dozen or more bills introduced, focusing on everything from basic housekeeping/clean up to addressing affordable housing funds to creating a framework for an orderly dissolution process. 

The bill that has seemed to have the most momentum has been AB 1585,  It seeks to do the following:

  • Provides discretion to oversight boards to allow for expansion of enforceable obligations;
  • Restores some funds for low and moderate income housing;
  • Provides guidance regarding disposition of assets in an effort to avoid fire sale; and
  • Makes changes to stabilize bond payments.

AB 1585 was approved by the Assembly, 56-7, receiving two more votes than the super-majority required for passage as an urgency measure.  At this point, it remains unclear whether AB 1585 -- or any other pending redevelopment legislation -- will pass in both houses.  And if something does pass, it is also unclear whether Governor Brown will sign any such legislation.  To the extent a new law impacts the amount of money available to the state, a veto remains a likely outcome. 

Finally, a few new acronyms.  The Enforceable Obligation Payment Schedule, EOPS, is the schedule of enforceable obligations created by the redevelopment agencies before their dissolution.  These are not particularly significant at this point, because the real focus is on the Recognized Obligation Payment Schedule, ROPS, which is the enforceable obligation payment schedule created by the successor agency and then certified by the county auditor-controller and approved by the oversight board.  The ROPS will be getting considerable attention over the next few months as the stakeholders argue about what qualifies as a legitimate enforceable obligation -- and what does not.    

We can't predict what will happen next, but it will almost certainly be interesting.  And at the end of the day, it seems likely that the Fresno lawsuit will be only one in many, many legal disputes over this process. 

  • Rick E. Rayl

    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 ...

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