June 30, 2011, by
On Tuesday, the Legislature approved the latest budget proposal (SB 87) and sent the previously passed trailer bills, AB 1X 26 and 27, to the Governor for signature. The California Redevelopment Association and the League of California Cities will be filing legal actions in efforts to invalidate the legislation and obtain a stay on implementation.
If the legislation is upheld, redevelopment agencies will need to decide whether they should dissolve in accordance with AB1X26, or "pay to play" in accordance with AB1X27. This is a decision that should be analyzed in light of the particular circumstances of each redevelopment agency. Agencies should evaluate projects in process, property and other assets the city and agency may lose if the agency is dissolved, whether future net tax increment will be sufficient to fund planned redevelopment activities, and whether the agency can make the payments required by the legislation.