At its regular meeting on August 22 and in a businesslike manner with few questions, the Cypress City Council unanimously voted against paying “extortion” to the State of California and for dissolving its redevelopment agency and assuming the agency’s debts as City obligations.
In this case, Council members perhaps should have asked more questions of staff to make it clear that dissolving the redevelopment agency and assuming its debt obligations depend on the outcome of lawsuits filed to challenge the validity of AB X1 26 and AB X1 27. The two pieces of legislation were passed in an effort to balance the budget of the State of California by grabbing a bigger share of property taxes for the State at the expense of local entities like the City of Cypress.
AB X1 26 stopped redevelopment agencies in their tracks. Agencies are allowed only to meet already existing contractual and statutory obligations and pay down existing indebtedness. No new obligations could be taken on. The agencies themselves are dissolved effective October 1.
AB X1 27 allows redevelopment agencies to continue after October 1 provided cities pay the State of California significant amounts annually. (These annual payments have been described as “ransom” or “extortion” in heated responses by cities to the state legislation.)
One lawsuit was filed by the California Redevelopment Association (CRA), the League of California Cities, and the Cities of Union City and San Jose. Because of an accelerated schedule, a final ruling in this lawsuit is expected by January 2012.
A separate lawsuit was filed by the City of Cerritos.
If the lawsuits fail, the Cypress Redevelopment Agency will be dissolved and its debt taken over by the City of Cypress.
If the lawsuits succeeds, the Cypress Redevelopment Agency will not be dissolved and will retain its own debt.
From the staff report:
Again, should the CRA, Cerritos, and/or other lawsuits result in a court ruling which finds the two trailer bills unconstitutional under any of the numerous grounds presented in the legal arguments filed with the courts, this entire exercise will have no meaning and the Agency would continue operation as before.
In light of the State of California’s ongoing inability to budget within revenue limits, voters should closely follow actions taken by the State legislature and Governor Jerry Brown to manage the State’s budget.
Cypress Civic Center, photo by C.E.H. Wiedel.
- Cypress approves budget and capital improvement plan (oc-breeze.com)
- Majority-vote state budget hits schools, redevelopment agencies (oc-breeze.com)
- Cities ask state’s top court to block raid on redevelopment funds (latimesblogs.latimes.com)
- Brown Signs Bills That Kill Redevelopment (converseblog.wordpress.com)
- California Seizure of Redevelopment Funds Blocked by State Court (businessweek.com)