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Redevelopment Penalty Prompts Lawsuits (Updated)

CP&DR Staff on
Jul 19, 2012

As if on cue, several cities have already filed suit to block the penalty provisions in Assembly Bill 1484, the budget trailer bill passed two weeks ago.

AB 1484 was intended in large part to help successor agencies with matters such as disposal of assets and expenditure of bond funds. It also includes a demand that successor agencies immediately pay "claw-back" payments to local taxing entities; if they fail to do so, then the Department of Finance can garnish cities' property and sales tax monies. DOF recently announced that it would not levy fines until August, at the earliest.

A coalition of five San Diego County cities -- Chula Vista, National City, Oceanside, San Marcos and Vista -- have filed a joint suit against the state and county. 

Other cities that have reportedly filed suit include El Cerrito in Contra Costa County, Galt in Sacramento County, Selma in Fresno County and Apple Valley in San Bernadino County. 

Some of these cities have paid under protest, while others have failed to pay entirely. Statewide, AB 1484 assessments range from less than $1 million to over $10 million in some cases.  

Update: 

The board of the League of California cities voted unanimously Friday to authorize the filing of a lawsuit against AB 1484 on behalf of the League's member cities. The League staff contend that AB 1484's sales and property tax "claw-back" provisions violate multiple provisions of the state constitution that were adopted by the voters of California in 2004 (Proposition 1A) and 2010 (Prop. 22).

League Executive Director Chris McKenzie said in a statement: "AB 1484 represents a clear and present threat to the ability of cities to meet the public safety and other vital public service needs of the city resident of California. We also strongly believe the sales tax and property tax "claw-back" provisions violate the constitution and are inconsistent with other parts of AB 1484 that declare that redevelopment successor agencies are separate and apart from city governments."

The League has not announced if or when it would file suit.

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