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California Redevelopment Agencies Face Elimination on Feb. 1

More than 400 Community Redevelopment Agencies (CRA) in California will begin to phase out their operations this week as a decision by the California Supreme Court upholding a state law mandating their abolition goes into effect on Feb. 1.

In a decision announced on Dec. 29, the CA Supreme Court unanimously upheld a new state law abolishing the Los Angeles Community Redevelopment Agency and hundreds of similar agencies across the state, but ruled that a companion law forcing CRAs to give a portion of their tax revenues to the state was unconstitutional.

Redevelopment agencies are funded by the increase in tax revenues generated by projects in their areas. The agencies use the revenue to invest in additional projects mainly in blighted parts of cities.  The Court’s decision means that all RDAs will be dissolved under the constitutional Dissolution Act, and none will have the opportunity to opt into continued existence under the law ruled unconstitutional, the Alternative Redevelopment Program Act.

The ruling was a crushing blow to redevelopment agencies, which sued earlier this year to block both laws. Because the court ruling also nixed the plan to allow local governments to buy back into redevelopment, the CRAs will be phased out when their contracted projects are completed.

After the high court’s ruling was announced, the California Redevelopment Association and League of California Cities, plaintiffs in the lawsuits, called on state lawmakers to urgently bring forward legislation to revive the agencies.

However, Gov. Jerry Brown, hailed the state Supreme Court’s decision. Brown supported the plan to abolish the RDAs as part of his ongoing effort to close the state’s multi-billion-dollar budget deficit. Brown said the court’s ruling “validates a key component of the state budget and guarantees more than $1 billion of ongoing funding for schools and public safety.” However, six of the high court’s seven justices agreed that Proposition 22, passed by voters in March, forbids the state from forcing municipal agencies to transfer money to the state.

 

 

 

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