The Los Angeles Times brings us a report on yesterday’s oral arguments before the California Supreme Court in the matter of the latest legislation on redevelopment agencies. (Maura Dolan and Jessica Garrison, Court Leans Toward Allowing Abolition of Redevelopment Agencies, L.A. Times, November 11, 2011 – click here). To the extent one may be so foolish as to draw any conclusions as to the outcome, based on oral arguments before the state Supreme Court, things look rocky for California redevelopment agencies.
The issue is whether the recent legislation giving a choice to the redevelopment agencies to share their funds with the cities in which they are located is constitutional in light of Proposition 22, a 2010 state constitutional amendment forbidding such revenue sharing. So if the state constitution forbids it, what’s the problem? Well, the problem is that there is also a newly-enacted statute which provides that redevelopment agencies that refuse to engage in such revenue sharing have to go out of business. But inasmuch as redevelopment agencies are creatures of state law, there is nothing to prevent the legislature that created them from abolishing them.
What the Times report indicates is that during oral argument several justices appeared to be accepting this analysis, giving rise to the possibility that the court may invalidate the revenue-sharing law (as violative of Proposition 22), but also hold that the statute abolishing redevelopment agencies in California is hunky dory because it does not transfer funds from redevelopment agencies. The court is also faced with arguments by some California counties complaining that redevelopment agencies are syphoning off gazillions of dollars from their property tax revenues which they would like to use for purposes of governance rather than filling the pockets of redevelopers and holders of tax-free redevelopment bonds. Given the threadbare condition of the public purse in California, that is an argument to be reckoned with.
So we’ll just have to sit tight and see how all that plays out. The decision will come down within 90 days – California law requires that. So stay tuned, folks.