The California Supreme Court recently issued a ruling upholding the constitutionality of a law abolishing the state’s numerous redevelopment agencies:
The California Supreme Court ruled Thursday against redevelopment agencies, including San Diego’s, and said they cannot remain in business by paying the state a portion of their property tax receipts….
The court was dealing with two laws passed by the Legislature in June to help close the state budget deficit by tapping the redevelopment funds held by redevelopment agencies.
One, AB1X26, abolished the redevelopment agencies and set up a mechanism to shift the redevelopment taxes back to the cities, counties, schools and others.
The second, AB1x27, allowed the agencies to continue but required them to opt in but only by paying pay the state $1.7 billion from their tax revenues this year and about $400 million annually in the future or about 10 percent of their tax receipts….
The second law is unconstitutional, the court said, because the agencies do have a right under Proposition 22, passed last year, to retain local revenues.
“We largely uphold Assembly Bill 1X26 and invalidate Assembly BillX127,” the court said.
And so in an ironic twist of fate, the agencies won their argument that they can keep their money but lost their argument that they can continue to exist.
Although the bill abolishing the redevelopment agencies was adopted primarily for the purpose of alleviating the state’s dire fiscal problems, it also has the beneficial side effect of curtailing eminent domain abuse. As I explained in this post defending the new legislation before it passed, the redevelopment agencies routinely engaged in dubious takings that transferred property to favored interest groups and destroyed more value than they created.
The Institute for Justice – a leading libertarian public interest law firm specializing in eminent domain issues [...]