California Redevelopment Agencies Dissolved On February 1st, 2012

Since the California Supreme Court upheld legislation to abolish approximately 400 Redevelopment Agencies in that State, members of the State Legislature have attempted to keep certain TIF dollars for affordable housing (SB 654) and to slow down the dissolution process (SB 659). However, neither of these bills was approved prior to the deadline for dissolution.

Current law requires any TIF fund balances not pledged to the repayment of outstanding obligations to be distributed to taxing entities. SB 654 proposed to retain approximately $1.3 billion in existing housing funds to pay for affordable housing projects. On January 31st, the California Senate passed this bill; however, as of February 1st, 2012, it had not passed the General Assembly.

SB 659 proposed to delay the Redevelopment Agency dissolution deadline to April 15th, 2012, in order to provide the Redevelopment Agencies with sufficient time to resolve issues related to the dissolution. This bill never gained any traction in the legislature.

Since no new legislation regarding the dissolution of the Redevelopment Agencies was passed prior to the dissolution deadline, the Redevelopment Agencies were dissolved as of February 1st, 2012. Current law requires a successor agency to handle the wind down of redevelopment activities. According to news reports, many cities in California have acted as successor agencies and are in control of former redevelopment agency assets. However, some cities, such as Los Angeles, have refused this role. In the case of Los Angeles, Governor Jerry Brown appointed a three-person panel to oversee the dissolution of the Los Angeles Redevelopment Agency.

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