Eminent Domain Report

By now, loyal followers of this blog are well versed in the whys and wherefores of redevelopment's demise.  You know all about the 30+ year struggle between the state and cities over allocation of property tax revenues.  The impact on the State's budget caused by Proposition 98, the creation of ERAFs and Propositions 1A and 22 in the new millennium are by now old hat.  You can recount by heart the story of the rise and fall of the alternative voluntary redevelopment program that was ABx1 27 and the Supreme Court’s decision in California Redevelopment Assn v. Matosantos.

But what does all of this mean for the assets, obligations, and liabilities of the former redevelopment agencies?  How do cities go winding down their redevelopment agencies and disposing of their assets?  When the Legislature adopted ABx1 26, it no doubt anticipated that most cities would elect to participate in the alternative voluntary redevelopment program.  Undoubtedly, a few would be unable or unwilling to make the required payments and would therefore wind down their agencies as mandated by ABx1 26.  What the Legislature never anticipated was that all 400 or so agencies would be dissolved simultaneously.  As a result, ABx1 26 paid scant attention to the details of dissolution.

The Legislature is now grappling with the unintended consequences of ending a 60 year program at the stroke of a pen.  What, for example, did they mean when they instructed cities to dispose of the assets of their former redevelopment agencies "expeditiously and in a manner aimed at maximizing value?  Are successor agencies supposed to expeditiously sell the properties at fire sale prices or should they develop long-term asset management plans to dispose of them in a more orderly, but less expeditious, fashion?  What of cities that elect to retain the housing assets and functions previously performed by their redevelopment agencies?  ABx1 26 passes on the obligations and liabilities for low to moderate income housing programs without clearly identifying funding sources.

These and other issues are addressed in various bills now pending before the State Legislature.