Last year’s budget produced a slew of new bills. Among them were two which affected Redevelopment Agencies (RDA). ABx1 26, the first of the two-bill budget package, eliminated the over 400 RDAs across the state. The second, ABx1 27, created an alternative voluntary ongoing RDA program by allowing agencies to make specified annual payments and be exempt from elimination. RDAs needed to pay the state $1.7 billion for FY 2011-12 and $400 million in subsequent budget years.
The California Redevelopment Association along with the League of California Cities and the cities of San Jose and Union City filed a petition claiming that AB 1x 26 and AB 1x 27 violate the California State Constitution, including Proposition 22.
On December 29, 2011, the California Supreme Court delivered its decision in the California Redevelopment Association v. Matosantos case, finding ABx1 26 (the “Dissolution Act”) largely constitutional and ABx1 27 (the “Alternative Redevelopment Program Act”) unconstitutional. The Court’s decision means that each RDA within the State of California has been dissolved and no longer exists as of February 1, 2012.
Under the Dissolution Act all authority, rights, powers, duties and obligations of the former RDAs are to be transferred to a “successor agency”. These new agencies are charged with the responsibility of paying off the RDA’s existing debts, disposing of the properties and assets in an appropriate manner to help pay off debts and return revenues to the local government entities that receive property taxes (Schools, Fire, Special Districts and more) and winding down the affairs of the RDA. At its January 10, 2012 meeting the Oakley City Council appointed itself as the “Successor Agency”. The council is not unique in this proceeding. The law allows the sponsoring community of the RDA (in this case the City of Oakley) to become the successor agency.
Not done creating boards and or agencies, the successor agency’s activities are subject to review and approval by an oversight board. This board is to be comprised of seven people, with a makeup dictated by the Dissolution Act. An individual may simultaneously be appointed to up to five oversight boards and may hold an office in a city, county, special district, school district, or community college district. Members of the oversight boards will serve at the pleasure of the entity that appointed them and will not receive compensation or reimbursement of expenses. It is expected that members of the oversight board will serve until July, 2016. Membership of the oversight board includes:
- Two members appointed by the County Board of Supervisors;
- One member appointed by the largest special district (East Contra Costa Fire Protection District), in the RDA – board member Pat Anderson has been appointed;
- One member appointed by the County Superintendent of Education – Eric Volta, Superintendent of the Liberty Union High School District has been appointed;
- One member appointed by the Chancellor of the California Community Colleges;
- One RDA employee appointed by the Mayor – staff member Paul Abelson has been appointed;
- One member appointed by the Mayor – Mayor Kevin Romick has been appointed.
Under the Court’s decision, the oversight board membership must be completed by May 1, 2012. The Dissolution Act requires the oversight board to direct the successor agency to determine whether contracts, agreements or other arrangements between the former RDA and private parties should be terminated or renegotiated to reduce the successor agency’s liabilities and to increase net revenues to the taxing entities.
The actions of the oversight board will in turn be overseen by the Director of the Department of Finance and may be subject to disapproval or modification.
Decisions made by the oversight board will not be effective for three business days pending a request for review by the Department of Finance. If the department requests a review of an oversight board’s action, the department shall have ten days from the date of its request to approve the oversight board action or return it to the oversight board for reconsideration. The oversight board must maintain a website and provide specific notification to various state officials.