California Supreme Court Upholds Legislation to Eliminate Redevelopment Agencies, Invalidates Option for Agencies to Survive by Sharing Tax Revenue

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In a decision reflecting perhaps the worst-case scenario for the redevelopment community, the California Supreme Court largely upheld Assembly Bill X1 26, which requires the dissolution of redevelopment agencies across the State, but invalidated Assembly Bill X1 27, which would have given redevelopment agencies an option of continuing to exist if the agencies shared their tax revenues. Redevelopment agencies in California now must proceed to dissolve, and transfer control to successor agencies, which are expected to be the city or county. The successor agency will be responsible for performing existing obligations, but no new redevelopment obligations can be assumed.

The League of California Cities has already announced that it will pursue legislative amendments to revive redevelopment agencies. Stoel Rives will continue to monitor and provide updates on this evolving situation.

If you have any questions about the issues raised in this alert, please contact a key contributor.

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