On June 30, 2011, Governor Brown signed SB 87, the main budget bill containing the FY 2011-12 State Budget.  Additionally, he signed a number of budget trailer bills, including ABX1 26, the redevelopment elimination bill, and ABX1 27, the bill that allows redevelopment agencies to “opt in” to a new system but force them to make $1.7 billion in payments next year to stay alive.

ABX1 26 and ABX1 27 become effective immediately upon being signed by the Governor. RDAs can not enter into any new agreements until they have enacted an ordinance committing to make the payments as required by ABX1 27.

On July 18th the League of California Cities (League), the California Redevelopment Association (CRA) and the cities of San Jose and Union City filed a petition with the California Supreme Court, challenging the constitutionality of AB 1X 26 and AB 1X 27, the two redevelopment bills passed as part of the state budget in June.
The Supreme Court accepted the case and in its order outlined an expedited briefing schedule. This was designed to meet the goal deadline for a decision by January 15, 2012, the date when redevelopment agencies are required to make their first payment. Here are the key deadlines laid out in the court’s order:
  • September 9, 2011: the state must file its brief
  • September 24, 2011: CRA and the League must file their response to the State’s filing
  • September 30, 2011:  Amicus curiae briefs must be filed with the court
  • October 7, 2011: Replies to individual amicus briefs must be filed

The court states it does not anticipate extending any of these deadlines and intends to set a hearing for oral arguments before the end of the year.

On the legislative front, legislative leaders, Senator Steinberg included, have promised to do a “clean-up” bill that will fix the problems included in the recently passed legislation.  Those promises include:
  1. Legislation that deals with proportionate funding.  This will ensure that schools, special districts and RDAs don’t get all the money.
  2. Legislation that could extend the life of RDAs who meet certain public policy goals such as SB 375 or job creation goals
  3. Legislation that protects affordable housing and ensures that housing money that has been taken is paid back by 2016.
  4. Legislation that deals with ensuring no new barriers to infill building have been created.

For more in-depth information on the situation click here for a Goldfarb & Lipman analysis and here for a CRA document on Frequently Asked Questions.