The End of Redevelopment

 

The End of Redevelopment

 

The Rialto Redevelopment Agency will close its doors on February 1, 2012 along with all

other redevelopment agencies in the State of California. The elimination of redevelopment

will mean the end to the City’s most powerful economic development tool, as well as the

death to several major infrastructure and affordable housing projects that would have

ultimately created thousands of new jobs for the community. The termination of the

Agency will also result in the demise of many existing loan and grant programs that helped

revitalize and improve older commercial and residential properties in the City.

When Governor Brown took office in January, 2011 he proposed to abolish redevelopment

to help resolve California’s $25 billion budget deficit. After months of legislative wrangling,

a compromise was reached with the enactment of two bills: ABX1 26 and ABX1 27. The

first bill, (ABX1 26), eliminated redevelopment agencies statewide, while the second bill

(ABX1 27) authorized reinstatement by each agency upon the agreement to make certain

“voluntary” payments for the benefit of the State. Following the passage of ABX1 26 and

ABX1 27, the California Redevelopment Association (CRA), League of California Cites

(League), and several independent cities filed a lawsuit challenging the constitutionality of

the two laws. CRA and the League argued that the two budget bills violated Proposition

1A (2004), Proposition 22 (2010), and the California Constitution.

On December 29, 2011, the California State Supreme Court handed down its decision that

ABX1 26, which eliminated redevelopment agencies statewide, was a constitutional

exercise of the Legislature’s authority. The Court opined that if the Legislature had the

right to create redevelopment, then it also had the right to eliminate redevelopment

agencies. The Court opined that ABX1 27 – which would have allowed agencies to

reactivate if they made “voluntary” payments to the State – was unconstitutional. The

Court indicated that the payment was not voluntary and therefore violated Proposition 22.

The Court also rejected the argument that the two bills were inseparably linked.

Although many legislators have indicated support for new legislation to continue some of

the basic goals of redevelopment, such as affordable housing, infrastructure and job

creation, it is unlikely that the Legislature will approve any such legislation prior to

February 1, 2012, the date upon which the Agency will cease to exist.

In accordance with the Court’s ruling, the Rialto Redevelopment Agency will be dissolved

on February 1, 2012. A Successor Agency will be created to provide basic administrative

support in the dissolution process. A seven member Oversight Board, which will be

controlled by County of San Bernardino and various School District appointees, will

oversee the payment of all existing obligations, the liquidation of all current assets of the

Agency, and disposition of all proceeds and unencumbered funds to various state taxing

entities. For additional information on the dissolution of the Agency and the creation of the

Successor Agency, please contact John Dutrey at (909) 879-1151.

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