Dissolution of Redevelopment Agencies in California: AB1X26 and AB1X27 – with Reinstatement of Tax Increment Reinvestment Zone

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Dissolution of Redevelopment Agencies
Facing a monumental budgetary crisis in California, Governor Jerry Brown supported the 2011 Budget Act which reallocated property tax revenue that was previously used to fund redevelopment projects, to go instead to local governments in an attempt to protect funding for public services.2
In the eyes of the legislature, California’s Redevelopment Agencies (RDA’s) were perceived to shift property tax revenues away from services provided to schools, counties, special districts, and cities.3 By eliminating RDA’s, it was believed that an immediate windfall for the state budget would be created thereby relieving a portion of the budgetary crisis.
As a result of the passage of the 2011 Budget Act and finalized by Assembly Bill 1x26, California’s RDA’s were terminated on February 1, 2012 after sixty years of implementation and often being used as a model for duplication in other states.4
Statement of Purpose
This paper provides an overview of the structure and purpose California’s Redevelopment Agencies, examines the property tax structure in California with consideration of the impact of Proposition 13, 98, and 22, and the consequences of this structure on the fate of RDA’s as determined by the California Supreme Court decision California Redevelopment Association v. Matosantos.
Further research will conclude that moving forward, some form of tax increment financing that was lost with the abolishment of RDA’s must be reestablished to create a feasible mechanism for private investment to continue in blighted areas in need of improvement.
A judicial decision, based on previous statues and case law, will be presented well as a proposal of action items to establish the future of redevelopment in California.
California Redevelopment Agencies – An Overview
The California legislature enacted the Community Redevelopment Act in 1945 to assist

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