As most everyone in the affordable housing business or local government is aware, the California State Supreme Court is considering the arguments regarding the legality of ABx1-26 and ABx1-27, the two Redevelopment Restructuring Acts.  It is clear that the Legislature expected that both statutes would be found constitutional and would work together to create a stream of revenue to help close a substantial part of the Budget gap projected to occur over the coming years.

However, the statutes have been challenged and the Supreme Court has accepted briefs and oral arguments regarding their legality.  Most observers have expected that both statutes would be found constitutional together, or that they would be found unconstitutional together.  But the County of Santa Clara and others argued for a different outcome – that ABx1-26 be validated and that ABx1-27 be overturned.  This would result in local redevelopment agencies going out of business (ABx1-26) and not having the option of resurrection through “voluntary” payment of an annual remittance (ABx1-27).

There is, however, a twist to this outcome that most people have not considered. Continue reading →

On August 11, 2011, the California State Supreme Court issued a partial Stay of Execution of the two statutes that together make up the Redevelopment Restructuring Act (ABx1 26 and ABx1 27).  Many questions continue to come up regarding what redevelopment agencies can do until the Court finally decides the case, sometime in January 2012.

The outline below is adapted from guidance provided to local redevelopment agencies by their counsels.  If you have questions, you should seek specific advice from your own attorneys, but this seems to be consistent with what attorneys around the state are telling their clients. Continue reading →

From Josh Rosa at PublicCEO.com, an interesting proposition – what if the California Supreme Court, in ruling in the lawsuit, CRA v Matosantos, over the constitutionality of the Redevelopment Death and Resurrection laws, AB1X 26 and 27, decides to split the difference and allow one law to stand and strike down the other?

There is, however, a third possible outcome. The Supreme Court could uphold the first law (eliminating redevelopment) and strike down the second. This potential “split decision” would inevitably end redevelopment, without any backup plan to compensate cities for such a dramatic loss. Bundled together, the two laws effectively form a policy of shrinking redevelopment radically, but allowing it to go on in a smaller version. To continue existing, for example, the Sacramento Housing and Redevelopment Agency is preparing to make a $21.9 million payment, which is roughly 40 percent of its total tax-increment funding. These cuts are painful but, in theory, SHRA will survive and persevere. Throughout the state, hundreds of agencies are preparing their own voluntary payments and adjusting to a new reality of scarcer resources. But that safety net might be taken down. Stripped of the reinstatement law, the Legislature’s last budget deal could potentially end redevelopment permanently [emphasis added].

Whichever way the Supreme Court rules, redevelopment funding for all development, including affordable housing, is going to stay shrunken for some years to come, if it is available at all. Lenders and developers should be well down the road of planning for this very-likely outcome – what is your organization doing to prepare?