On June 29, 2011, the Governor signed AB X1 26 and AB X1 27. The bills took effect immediately upon the Governor’s signature.

AB X1 26 legislates that redevelopment agencies are now prohibited from taking a number of actions, including incurring indebtedness, making loans, entering into or modifying contracts, and adopting or amending redevelopment plans. Redevelopment agencies are now also subject to a number of responsibilities, including preserving all assets, minimizing all liabilities, and preserving all records.

Redevelopment agencies that do not comply with the provisions of AB X1 27 will be dissolved as of October 1, 2011. Except for those provisions of the Redevelopment Law that are repealed, restricted, or revised by AB X1 26, all authority, power, and obligations previously vested with agencies pursuant to the Redevelopment Law will vest in successor agencies upon such dissolution.

Under AB X1 27, a redevelopment agency may resume its activities (i.e., be exempted from the provisions of AB X1 26 and thus continue to exist) upon the city’s adoption of an ordinance stating its participation in the Alternative Voluntary Redevelopment Program, which requires the city to make certain specified annual payments to the county auditor for distribution to schools, fire protection agencies, and transit agencies beginning in fiscal year 2011-2012. The city must adopt this ordinance on or before November 1, 2011.

It is expected that the League of California Cities and the California Redevelopment Association will file legal challenges to the bill in the near future, asserting, among other things, that the bills are unconstitutional and in conflict with Proposition 22. Proposition 22 is the 2010 ballot measure, passed with the support of 61% of the voters, that intended to prohibit the State from “seizing, diverting, shifting, borrowing, transferring, suspending, or otherwise taking or interfering with revenues dedicated to funding services provided by local government or funds dedicated to transportation improvement projects and services.” (Prop. 22, Sec. 2.5)

Stay tuned, as there is likely to be more twists and turns before this saga is over.

David Snow, AICP, APA CA Vice President Policy and Legislation

Sande George, APA CA Executive Director and Lobbyist

Lauren Silva, APA CA Lobbyist