COSTA MESA, Calif., Oct. 3, 2011 – A team of attorneys at Rutan, LLP, Orange County’s largest full-service law firm, are representing 10 Southland cities and their redevelopment agencies in a landmark lawsuit challenging the constitutionality of two bills adopted by the California State Legislature and signed into law by Gov. Jerry Brown this past June.
On Sept. 26, the attorneys filed a lawsuit in Sacramento County Superior Court alleging the state’s plan to take $1.7 billion from redevelopment agencies violates provisions of the California Constitution protecting local agency funding and other constitutional provisions relating to the process by which the two bills were adopted.
On Sept. 30, the attorneys also filed a friend-of-the-court brief with the California Supreme Court in support of a lawsuit brought by the League of California Cities and California Redevelopment Association that challenges the constitutionality of the two bills on similar but narrower grounds.
The attorneys contend the two bills violate Proposition 22, a constitutional amendment recently approved by California’s voters to prohibit State diversion of local government revenues, and a separate provision of the Constitution that guarantees redevelopment agency funding for the completion of redevelopment programs.
They also contend the bills violate constitutional provisions requiring a two-thirds vote for passage, which the bills did not receive; a constitutional provision limiting the scope of legislation permitted to be adopted during a special session of the Legislature to the subject set forth in the Governor’s proclamation calling the special session; and a constitutional provision that legislation adopted during a special session does not go into effect immediately, which the bills were written to do.
The cities and redevelopment agencies represented by Rutan are Cerritos, Carson, Commerce, Cypress, Downey, Lakewood, Paramount, Placentia, Santa Fe Springs and Signal Hill.
The bills in question are ABx1 26 (the “Dissolution Bill”) and ABx1 27 (the “Forced Payment Bill”).
ABx1 26 purports to compel the dissolution of all of the approximately 425 existing redevelopment agencies in the State of California and redirects the property tax increment revenues that would otherwise be allocated to redevelopment agencies for redevelopment purposes to other public agencies for other purposes.
ABx1 27 purports to establish an alternative “voluntary” redevelopment program under which redevelopment agencies can continue to exist, but only if they or their host jurisdictions pay $1.7 billion dollars in fiscal year 2011-12 and several hundred million dollars in future fiscal years to local county auditor-controllers, which funds would then be re-allocated to various other public agencies for non-redevelopment purposes, chiefly, K-12 public education.
The Rutan team includes partners Jeffrey Oderman, Dan Slater, Mark Austin, Bill Irhke, and Bill Marticorena, and associate Megan Garibaldi.
About Rutan LLP
Rutan is Orange County’s largest full-service law firm with offices in Costa Mesa and Palo Alto. Primary practice areas include corporate and securities law, business and real estate litigation, labor and employment law, intellectual property, real estate, government and regulatory law, land use law, bankruptcy, condemnation and property valuation, environmental law, and taxation and estate planning. Detailed information about the firm is available at www.rutan.com.
