California’s Redevelopment Nightmare Coming To An End

John Kramer
John Kramer · December 30, 2011

Arlington, Va.—In a landmark victory for private property owners in the Golden State, the California Supreme Court today upheld a statute abolishing the nearly 400 redevelopment agencies across the state. The court also struck down a law that would have allowed these agencies to buy their way back into existence. The final outcome of the case is that, in 2012, California’s decades-long redevelopment nightmare will finally come to an end.

California redevelopment agencies have been some of the worst abusers of eminent domain for decades, violating the private property rights of tens of thousands of home, business, church and farm owners. The Institute for Justice has catalogued more than 200 abuses of eminent domain across California during the past ten years alone. In California Scheming: What Every Californian Should Know About Eminent Domain Abuse, the Institute for Justice exposed the enormous amounts of taxpayer money used to fund these illegitimate land grabs. In fiscal year 2005-2006 alone, redevelopment agencies’ revenues were an astonishing $8.7 billion. In other words, 12 percent of all property taxes in California that year were sent to these bureaucrats.

As part of the state’s response to its fiscal emergency and to stop this drain on the state’s resources, the legislature passed, and Governor Jerry Brown signed, two laws: Assembly Bill 1X 26, which dissolves redevelopment agencies, and Assembly Bill 1X 27, which exempted agencies that agreed to make payments into funds benefiting the state’s schools and special districts. The California Redevelopment Association and the League of California Cities, among others, challenged both laws, arguing that they violated the California Constitution.

The court held that AB 1X 26, the law barring the agencies from engaging in new business and providing for their windup and dissolution, was “a proper exercise of the legislative power vested in the Legislature by the state Constitution.” The court concluded that the Legislature has both the power to create such agencies “and the corollary power to dissolve those same entities when the Legislature deems it necessary and proper.” In contrast, the court concluded that AB 1X 27, which allowed the agencies to continue to exist if they made certain payments, violated a provision of the California Constitution that prohibits the Legislature from requiring payments from redevelopment agencies to the state.

“This decision represents the worst of all worlds for California redevelopment agencies—and the best of all worlds for California property owners and renters,” said Dana Berliner, a senior attorney with the Institute for Justice. “The agencies managed to achieve a decision that upholds their dissolution while striking down a law that gave these agencies a way to stay in existence. The agencies’ arrogance, so often employed against property owners, finally proved their undoing.” The Institute for Justice is a public interest law firm that is the nation’s leading defender of victims of eminent domain abuse—when the government seizes perfectly fine property not for public use, but for private development—across the country, including in California.

While the decision focused on specific provisions of the California Constitution, its practical effect represents a significant victory for California property owners. “Redevelopment in California has been a billion-dollar, state-subsidized boondoggle that has completely eroded private property rights through the abuse of eminent domain for private gain,” said Christina Walsh, the Institute’s director of activism and coalitions. “With the court’s decision, redevelopment has finally met its long-overdue end, and property owners who have been living in terror across the state can finally rest safe in what they’ve worked so hard to own.”

IJ attorney Bill Maurer said, “Today’s decision reaffirms the common-sense conclusion that state agencies do not have a constitutional right to perpetual existence. More importantly, it means that California is no longer lagging behind the rest of the country in respecting private property. Rather than interfering with California’s recovery, this decision should encourage it, as people considering moving to or staying in California now know that their property cannot be seized and transferred to a private entity by out-of-control, unaccountable redevelopment agencies.”