California Supreme Court Decision Eradicates Redevelopment Agencies

Ben Reznik and Sheri Bonstelle
In a blow to the more than 400 redevelopment agencies in California, the California Supreme Court issued an opinion today upholding the constitutionality of AB1X26, the Dissolution Bill and finding AB1X27, the Pay for Continuation Bill, unconstitutional in the California Redevelopment Agencies v. Matosantos case.

The ruling, authored by Justice Kathryn Mickle Werdegar, and joined by six other justices, concludes that Proposition 22 does not impede the state’s power to dissolve state agencies, stating that the Dissolution Bill is a proper exercise of the legislative power vested in the Legislature by the state Constitution. The court further holds that Proposition 22, while it amended the state Constitution to impose new limits on the Legislature’s fiscal powers, neither explicitly nor implicitly rescinded the Legislature’s power to dissolve redevelopment agencies. Article XVI, Section 16 of the state Constitution also does not impair the power to dissolve redevelopment agencies.

The Court found that Proposition 22 prevents the state from enacting the Pay for Continuation Bill to force redevelopment agencies to turn over funding in order to continue operation. Because the flawed provisions of this Bill are not severable from other parts of that measure, the Pay for Continuation Bill is invalid in its entirety.

The Court extends the deadlines set forth in the Dissolution Bill, such that the deadline for performance of an obligation in Part 1.85 of Division 24 of the Health and Safety Code (§§ 34170-34191) arising before May 1, 2012, shall take effect four months later. For example: (i) under section 34170, subdivision (a), all provisions in part 1.85 are now operative on February 1, 2012, (ii) the draft obligation payment schedules, under section 34177, subdivision (l)(2)(A), are now due March 1, 2012, and (iii) successorship agency board membership (§ 34179, subd. (a)), must be complete by May 1, 2012. All deadlines arising after May 1, 2012, are not affected.

Justice Cantil-Sakauye authored a dissenting and concurring opinion, which dissented concerning the constitutionality of the Pay for Continuation Bill. The opinion argues that nothing in the Pay for Continuation Bill compels community sponsors to violate Proposition 22, and that petitioners have not met their burden to show this.

This decision is a crucial win for Governor Jerry Brown and state lawmakers. In a news release, Governor Brown said that “[t]oday’s ruling by the California Supreme Court validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety.”

___________________________
Ben Reznik is the founder and chair of the Government, Land Use, Environment and Energy Department at Jeffer Mangels Butler & Mitchell LLP. Ben’s practice emphasizes real estate development entitlements, zoning and environmental issues. He appears regularly before planning commissions, city councils and other governmental boards and agencies, as well as the courts. Ben and his work have been featured in the Los Angeles Times and the Los Angeles Business Journal, and he has been included in the Los Angeles Daily Journal as one of California’s “Top 100” lawyers. Ben leads a group of distinguished attorneys whose work has resulted in JMBM’s inclusion in the U.S. News & World Report / Best Lawyers® list of Best Law Firms (2011-2012) with a National First-Tier Ranking and a Metropolitan First-Tier Ranking (Los Angeles) in the area of Land Use and Zoning Law. Contact Ben at BMR@jmbm.com or 310.201.3572.

Sheri Bonstelle’s practice focuses on land use, zoning, environmental, litigation and construction matters. She manages all aspects of the entitlement process, including representing clients before local and state agencies, commissions and councils. She coordinates environmental review under the California Environmental Quality Act (CEQA) and National Environmental Protection Act (NEPA) and obtains permits and approvals necessary under the Clean Water Act, Clean Air Act, Endangered Species Act, California Coastal Act, and historic preservation laws. She also negotiates participation and development agreements with the Community Redevelopment Agency, and obtains approval of adaptive reuse projects in historic buildings in Los Angeles. She coordinates land use and environmental diligence review for large multi-property portfolio sales and represents signage companies and building owners with respect to preserving signage rights in Los Angeles. Sheri is a licensed architect in the State of New York. Contact Sheri at SBonstelle@jmbm.com or 310.712.6847.