California's Supreme Court upheld the Legislature's dissolution of 400 redevelopment agencies in order to use $1.7 billion from the agencies to help bridge the state budget gap.
The high court also struck down a companion measure that would have allowed the agencies to continue by paying a part of their funds to the state. Chief Justice Tani Cantil-Sakauye dissented in part in the 6-1 ruling, writing that the majority went too far by also nixing the companion measure, the Daily Journal reported.
Redevelopment agencies had sued, claiming that the bills signed into law as part of the state budget, violated Proposition 22, which prohibits the state from dipping into local funds.
Some experts say the Legislature could still preserve the agencies while balancing the budget by reforming how the agencies are funded.
The agencies will dissolve by February 1, but they will be allowed to meet existing obligations, and their assets will be handed to "successor agencies." Details of the process have yet to be clarified.
What will happen to enforceable obligations to investors and localities is not clear. Lawyers expect lawsuits to result from the uncertainty.
Jake Flaherty
Daily Journal Staff Writer
