After a late evening of floor sessions on June 28, 2011, both the Senate and the Assembly, with a majority vote, passed the “Democratic Budget”. Governor Brown signed some of the $85.9 billion budget which includes bills ABX1 26 and ABX1 27. ABX1 26 and ABX1 27, both by Assembly member Bob Blumenfield (D-San Fernando Valley), eliminate redevelopment agencies.
ABX1 26 (SBX1 14 and ABX1 26), is the first of the two-bill budget package to eliminate redevelopment agencies. Each redevelopment agency is replaced by a “successor agency.” The bill also provides for an orderly wind-down of redevelopment agency activities including payment of existing debt and the continuation of pass-throughs. ABX1 26 is similar to the Governor’s initial proposal under AB 101 and SB 77 to eliminate redevelopment agencies. However, unlike those bills, ABX1 26 does not provide for any payment to the state. Under this bill, as of October 1, 2011 redevelopment agencies would cease to exist as corporate governmental entities. Until that date, agencies are prohibited from taking essentially any actions other than payment of existing indebtedness and performance of existing contractual obligations. On October 1, all agency property and obligations would be transferred to successor agencies, except for the assets of the low and moderate income housing fund. Existing balance in low and moderate income housing fund will be distributed to schools, counties, and special districts.
ABX1 27 (SBX1 15 and ABX1 27), the related bill to ABX1 26, creates an alternative voluntary ongoing redevelopment agency program. The bill states that agencies that make specified annual payments are exempt from elimination. ABX1 27 provides that, notwithstanding SBX1 14 or ABX1 26, an agency may continue to operate and function if the community has enacted an ordinance by November 1, 2011. The contents of the ordinance are described simply as needing ”to comply with the bill’s provisions.” Additionally, in order for a redevelopment agency to remain in existence, city or county must make payment to schools, fire protection districts, and transit districts. The amount of the payment for each city or county is calculated by the Department of Finance and communicated to cities and counties not later than August 1, 2011. Should a city or county fail to make the required payments after adoption of the ordinance, then the redevelopment agency would be subject to the elimination provisions of SBX1 14 and ABX1 26.
Several organizations have been vocal in their opposition to these bills and, given the Governor’s signature, there will likely soon be litigation to challenge their validity.