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Oral Arguments Heard Today in League’s Challenge to AB 1484 Clawback Provisions

April 19, 2013
Sacramento County Superior Court Judge Michael Kenny heard oral arguments earlier today in League of California Cities v. Ana Matosantos, the League’s challenge to portions of AB 1484, the 2012 redevelopment budget trailer bill.
The League is represented in this matter by Best Best & Krieger. Judge Kenny has 90 days from today to issue his written ruling. The League is pleased with the oral argument and cautiously optimistic as to the outcome, but will wait for the court’s ruling.

The lawsuit contends that AB 1484 contains unconstitutional property and sales tax claw-back and other provisions that violate the California State Constitution, including both Proposition 1 A (2004) and Prop. 22 (2010). The petition does not seek to invalidate AB 1484 in its entirety, but it is being filed to ensure that the wind-down of redevelopment agencies is executed in an orderly and constitutional fashion without jeopardizing the fiscal stability of cities as they work to faithfully implement the redevelopment dissolution legislation.
The plaintiffs are: the League of California Cities, the city of Vallejo, the Vallejo Successor Agency, and League Executive Director Chris McKenzie as the taxpayer plaintiff. The defendants are: the Department of Finance, the Board of Equalization, the State Controller and the Solano County Auditor Controller.
In the lawsuit the petitioners contend that AB 1484 lacks sufficient standards to guide and constrain the Department of Finance’s decision making authority in a number of significant areas. The following provisions are being challenged as unconstitutional:
  • The Department of Finance’s authority to order the Board of Equalization to withhold sales tax from those cities whose successor agencies failed to make the July “true-up” payment and in other circumstances;
  • County auditor-controllers’ authority to withhold property taxes in certain circumstances; and
  • Those provisions of AB 1484 that establish an unconstitutional delegation of legislative authority to the Department of Finance.
The League also asserts in the lawsuit that the Department of Finance has not complied with the Administrative Procedure Act (Act), which provides the procedures by which state agencies must adopt regulations. The Department of Finance has adopted no regulations under the Act to implement AB 1484.
The League’s lawsuit is one of dozens of lawsuits that have been filed in connection with redevelopment dissolution. The League is tracking this litigation, and a summary of all the lawsuits filed so far is available on the League’s website.

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