In CRA v. Matosantos, the Court upheld ABX1 26 (the redevelopment "elimination" bill), but struck down ABX1 27, the bill that would have allowed agencies to remain in operation as long as they made a payment to the state. The bills were passed as part of the 2011-12 state budget.
Today's ruling also means that the State will not be entitled to receive the full $1.7 billion it had assumed as part of last year's budget, creating a current year budget gap that will have to be addressed.
CRA Board President Julio Fuentes said: "Without immediate legislative action to fix this adverse decision, this ruling is a tremendous blow to local job creation and economic advancement. The legislative record is abundantly clear that Legislators did not intend to abolish redevelopment. We hope to work with state lawmakers to come up with a way to restore redevelopment. "
Senate President Pro Tem Darrell Steinberg, Assembly Speaker John Perez, along with many other lawmakers, made it clear that the legislative vote was intended only to extract revenues from redevelopment agencies, not abolish them altogether. During the budget debate on the two bills, Senator Steinberg said "[T]his bill is the fair and right choice because it does not in fact eliminate redevelopment but it reduces its size."
State Senator Alex Padilla said, "Redevelopment creates jobs and economic activity vital to our state's economic recovery. It was clearly not my desire, nor the intention of most of my colleagues, to abolish redevelopment when we voted on the state budget last year. I would like to see redevelopment restored so it can continue to be a vital tool to improve local communities and local economies. I look forward to working with my colleagues next year to make that happen."
Assemblymember Luis Alejo said, "I've seen firsthand the benefits of redevelopment in my district. When I voted for the budget last June, I did so with the intent that redevelopment agencies in my district and throughout the state would continue to operate, continue to produce jobs and boost local economies. Today's ruling essentially kills redevelopment and I plan to start off 2012 by collaborating with my colleagues to restore redevelopment. We need it in California."
Chris McKenzie, Executive Director, League of California Cities said: "Redevelopment is indispensible to cities to spur economic development, create jobs and improve communities. We know legislators recognize that and we hope they're willing to work with us to reinstate redevelopment. We want to work as partners with state lawmakers to revive this tool in an accountable manner."
Jim Kennedy, CRA's Interim Executive Director said: "CRA is ready and willing to engage in immediate dialogue with Legislators and the Governor on a meaningful 'fix' to this problem. We have ideas for ways to restore redevelopment while also providing the state budgetary relief in a manner that doesn't violate Prop 22. Time is of the essence, and the future of California's economy is at stake. We hope legislators will join us in this important effort, for the sake of our future."
State Building and Construction Trades Council President Bob Balgenorth said, "I am ready to meet with legislators right away to figure out a way to restore redevelopment. It's important to our industry. Construction employment plunged between 30-40 percent in the last three years, especially in the construction trades. Redevelopment puts people to work and construction spending stimulates the economy. The state and its local communities need redevelopment."
Background on the lawsuit:
In July 2011, California Redevelopment Agency v. Matosantos was filed in the California Supreme Court by CRA, the League of California Cities, and the cities of San Jose and Union City, challenging the constitutionality of ABX1 26 and ABX1 27. These two bills were passed as part of the 2011-12 state budget and work together to eliminate redevelopment agencies (ABX1 26) unless they agree to pay the state $1.7 billion in this fiscal year and $400 million to schools and special districts in subsequent budget years (ABX1 27). The CRA/League legal team argued these two budget bills directly violated Proposition 1A (2004), Proposition 22, and Article 16 Section 16 of the California Constitution.