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California Supreme Court Upholds Legislature’s Decision to Abolish Redevelopment Agencies

Court Holds in Favor of County of Santa Clara’s Position

SANTA CLARA COUNTY, CALIF. – Today the California Supreme Court unanimously upheld the Legislature’s power to abolish redevelopment agencies (“RDAs”) statewide. This decision adopted arguments made by the County of Santa Clara (“County”), a party to the case. The result is that scarce public dollars will return to schools, counties, fire districts and other local agencies to perform vital public services.

The County joined as a respondent in the case, California Redevelopment Association et al. v. Matosantos et al. (California Supreme Court Case No. S194861), shortly after it was filed. The controversy centered on the validity of two legislative bills that were passed as part of the state’s FY 2012 budget. The first, ABX1 26, abolished all redevelopment agencies in the state through an orderly wind-down process. The second, ABX1 27, created a new voluntary redevelopment program. The Court unanimously upheld ABX1 26; and, by a 6-1 vote, it struck down ABX1 27 as a violation of Proposition 22. The end result is that redevelopment agencies throughout the state will be required to wind-down operations and public dollars will be returned to local governments as redevelopment debts are fulfilled.

“Redevelopment has had a huge negative effect on local governments’ ability to provide basic public services,” said Miguel Márquez, Santa Clara County Counsel. “Prior to today’s ruling, redevelopment agencies received 12 percent of all property tax revenue in the state. The Court affirmed that the Legislature may abolish redevelopment agencies to better serve the needs of all Californians during these difficult economic times.”

In Santa Clara County alone, this decision will eventually mean a return of $90 million annually that can be used for critical health and safety services and vital infrastructure provided by the County, and over $150 million annually for schools within the County.

“This decision does not mean an end to economic development or redevelopment activities, just an end to the diversion of money to redevelopment agencies,” said Jeffrey V. Smith, Santa Clara County Executive. “In fact, the County – which does not have its own redevelopment agency – already plays a large role in job creation, public safety and economic development. The Court’s decision will help the County address the enormous needs in public safety, health care, and transportation infrastructure such as roads and expressways.”

“We look forward to implementing the careful wind down of redevelopment that the Legislature directed,” said Vinod Sharma, Santa Clara County Director of Finance. “We are pleased that the County’s participation in this case has led to the correct outcome, which will benefit schools and local governments for years to come.”

Media Contact: Miguel Márquez, County Counsel, Office of the County Counsel at (408) 299-5902 or Gwendolyn Mitchell/Laurel Anderson, Office of Public Affairs, (408) 299-5119
Posted: December 30, 2011