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Client Alert

California Supreme Court Ruling Abolishes Redevelopment Agencies

January 03, 2012

BY KENNETH KRUG, MITCHELL B. MENZER, JEFFREY S. HABER & CHARLES V. THORNTON

In July 2011, California enacted legislation that abolished the state's redevelopment agencies and a companion bill that gave the agencies the option of continuing in existence in exchange for transferring tax revenues to the state. The redevelopment agencies appealed to the California Supreme Court arguing that both bills violated the state Constitution. On December 29, 2011, the California Supreme Court upheld the abolition of the redevelopment agencies as a valid exercise of the legislature's power but invalidated the bill giving the agencies the option to continue in existence. As a result of the Court's ruling, redevelopment agencies will cease to exist as of February 1, 2012 and the procedures for dissolving the agencies will go into effect. This Stay Current discusses the implications of the Supreme Court's decision as it will affect developers, lenders, investors and other parties that are doing business with redevelopment agencies.

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