Justices Wound City Redevelopment Agencies

SAN FRANCISCO (CN) - California's high court upheld a bill Thursday that empowers the Legislature to dissolve city redevelopment agencies, and struck down a companion bill that lets the agencies continue operating if they pay the state.

"Assembly Bill 1X26, the dissolution measure, is a proper exercise of the legislative power vested in the Legislature by the state constitution," Justice Kathryn Werdegar wrote for the majority. "That power includes the authority to create entities, such as redevelopment agencies, to carry out the state's ends and the corollary power to dissolve those same entities when the Legislature deems it necessary and proper."

During oral argument in November 2011, an attorney for the California League of Cities said his clients could live with AB1X27, which requires the state agencies to pay $1.7 billion due on Jan. 15 and May 15 of 2012 if they want to continue operating, but ABIX26 was "the whole ballgame."

"The worst possible outcome would be to win on 27 and lose on 26," Steven Mayer had said. "AB26 is life or death for them."

But in a win for state lawmakers and Gov. Jerry Brown, the high court said California has the right to eliminate the agencies.

Chief Justice Tani Cantil-Sakauye alone dissented on AB1X27, writing that the bill does not run afoul of Proposition 22, a voter-backed measure that blocks the state from taking local money.

"Even assuming the broadest possible construction of Proposition 22 and applying the more lenient standard for facial challenges, petitioners have failed to provide evidence to support a finding that Assembly Bill 1X 27 is unconstitutional," Cantil-Sakauye wrote. "The irony of these circumstances concerning Proposition 22 should not be ignored - the very measure that was crafted to protect financing for new redevelopment projects has been broadly interpreted in a manner that effectively ends financing for all new redevelopment projects. This cannot be a necessary result intended by the proponents of Proposition 22 concerning redevelopment."

Justices Joyce Kennard, Marvin Baxter, Ming Chin, Carol Corrigan and Goodwin Liu signed the majority decision.

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