Redevelopment Law Unconstitutional Because of Impairment of Contract?
Largely lost in the noise and furor surrounding the decision by the California Supreme Court upholding AB 1X 26 (California Redevelopment Association v. Matosantos (2011) 53 Cal.4th 231, which terminated the functions of local redevelopment agencies, is that there are strong arguments the new law violates state and federal constitutional provisions prohibiting legislation that results in impairment of existing contracts. Neither side in the Matosantos case raised the impairment of contracts argument and the Supreme Court chose not to raise the issue sua sponte. If AB 1X 26 was found to violate the Impairment of Contract clauses of either the state or federal constitutions, the violative provisions are so deeply woven throughout the fabric of the act that severance of non-offending provisions would be difficult at best, potentially resulting in the entire act being struck. While a successful impairment argument would possibly lead to the voiding of the legislation, it would not necessarily mean that the California Legislature could not enact a narrower RDA "abolishment" statute that terminated future and further contracts while better protecting the enforceability of existing contracts.
Continue Reading Questions & commentsState Cancellation of Redevelopment Agencies May Affect You!
On December 29, 2011, legislation to dissolve all redevelopment agencies became effective when the California Supreme Court released its opinion in California Redevelopment Association v. Matosantos, challenging the Legislature's adoption of AB 1X 26, providing for elimination of California redevelopment agencies (RDAs), and AB 1X 27, exempting from elimination any RDA that makes a voluntary contribution of its revenues. The Court has upheld the constitutionality of AB 1X 26 and struck down AB 1X 27. Continue Reading Questions & comments
Update On Redevelopment Law: The Supreme Court Makes it Official - Redevelopment Is Dead In California
By Michael Kiely and Phillip Tate
The California Supreme Court released its opinion today in California Redevelopment Association v. Matosantos, challenging the Legislature's adoption of AB 1X 26, providing for elimination of California redevelopment agencies (RDAs), and AB 1X 27, exempting from elimination any RDA that agrees to make its share of a $1.7 billion voluntary contribution of its revenues to other local government needs[1].
Continue Reading Questions & commentsSupreme Court Ruling on Redevelopment Fate Expected Tomorrow
The California Supreme Court has posted a Notice of Forthcoming Filing indicating that their opinion on CRA v. Matosantos will be posted on their website at 10:00 a.m. Thursday, December 29, 2011.
Continue Reading Questions & commentsSheppard Mullin's Michael Kiely Interviewed on the Ramifications of Redevelopment Legislation
Michael Kiely, a partner in the Real Estate and Land Use and Natural Resources Practice in the firm's Los Angeles office, participated in an interview via podcast about the Redevelopment Agency dissolution and reinstatement bills as well as the Supreme Court’s recent hearing of the arguments in the case. The discussion focused primarily on Michael Kiely's descriptions of the potential outcomes of the legislation as well as the various positions of different stakeholders which he has also blogged about on the Sheppard Mullin Real Estate, Land Use and Environmental Law Blog (click here to access the various blog postings.)
Please click here to listen to the full interview podcast posted by Eden Housing. Eden Housing produces a regular podcast on issues of interest to the affordable housing industry.
To learn more about our expansive capabilities within Sheppard Mullin's Real Estate, Land Use, Natural Resources and Environmental Law Practice, please click here. Feel free to contact Michael Kiely directly if you have questions about the ramifications of the recent Redevelopment legislation, or if we can assist you or your company with your legal needs.
Questions & comments
Update On Redevelopment Law: Litigation Proceeds - Uncertainty Continues
This is the fourth in a series of blog entries monitoring the proposed elimination of redevelopment agencies.
By Michael Kiely and Phillip Tate
True to their promise, the California Redevelopment Association, or CRA, and the California League of Cities, or CLC, petitioned the California Supreme Court on July 15, 2011 for a writ of mandate challenging the Legislature's adoption of ABX1 26, providing for elimination of California redevelopment agencies (RDAs), and ABX1 27, exempting from elimination any RDA that agrees to make its share of a $1.7 billion voluntary contribution of its revenues to other local government needs.[1] The CRA also asked the Court to implement a temporary stay of ABX1 26 and 27 pending the outcome of the litigation. Separately, 10 Southern California cities and their redevelopment agencies[2] filed a complaint for declaratory and injunctive relief and a petition for a writ of mandate with the Superior Court for Sacramento County on September 26, 2011.
Update On Redevelopment Law: Governor Signs Trailer Bills To End Redevelopment Agencies Unless They Make Payments - Uncertainty Continues
This is the third in a series of blog entries monitoring the proposed elimination of redevelopment agencies.
By Michael Kiely
Governor Jerry Brown has approved the "all cuts" 2011-2012 budget for the State of California, in the process signing the two trailer bills, ABX1 26, providing for elimination of California redevelopment agencies, called RDAs, effective October 1, 2011, and ABX1 27, exempting from elimination any RDA that agrees to make its share of a $1.7 billion voluntary contribution of its revenues to other local government needs.
Update On Redevelopment Law: Legislative Two Step To Cut Redevelopment Agency Funding Goes Down With Governor's Budget Veto
This is the second in a series of blog entries monitoring the proposal to eliminate redevelopment agencies.
By Michael Kiely
Yesterday, after heated and reportedly almost violent debate, both houses of the California State Legislature voted to pass ABX1 26, which would eliminate California redevelopment agencies, called RDAs, effective October 1, 2011, and ABX1 27, which would exempt from elimination any RDA that agreed to make its share of a $1.7 billion voluntary contribution of its revenues to other local government needs.
Update on Redevelopment Law: No News Is...No News
This is the first in a series of blog entries monitoring the proposal to eliminate redevelopment agencies and describing alternative public funding sources for redevelopment projects.
By Michael Kiely
After much discussion, debate and lobbying in the last three months, the fate of California's redevelopment agencies is still uncertain. Legislative bills to eliminate the agencies, called RDAs for short, have failed by a single vote. Many political leaders are still pushing for elimination; others are now actively searching for compromise solutions that will allow RDAs to survive. What appears certain at this point is that there will be less tax increment revenue available for real estate development in redevelopment project areas. As a result, development projects in these areas, already suffering from market forces and limited debt availability, will face an even bigger challenge.
