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Public Finance Update
California Supreme Court to Hear Suit Challenging Redevelopment Bills

The California Supreme Court (the “Court”) has agreed to hear a lawsuit challenging the constitutionality of Assembly Bill No. 26 (“ABX1 26”) and Assembly Bill No. 27 (“ABX1 27”) (collectively, the “Redevelopment Bills”). Governor Jerry Brown signed the Redevelopment Bills into law at the end of June 2011 as part of California’s budget package. The California Redevelopment Association and the League of California Cities subsequently filed the lawsuit alleging, among other things, that the Redevelopment Bills violate certain provisions of the California Constitution. The plaintiffs also requested the Court to issue a stay, which would stop the Redevelopment Bills from taking effect while the Court considers the case.

The Court stayed the enforcement of the Redevelopment Bills in many respects, but not completely.  Until the case is decided, certain restrictions on redevelopment agency operations that were imposed by ABX1 26 will remain in effect, including prohibitions against incurring new debt, acquiring or transferring property, modifying existing contracts, and entering into new contracts.

The Court established an expedited schedule for briefs and oral arguments to facilitate its stated goal of rendering a decision by January 15, 2012. 

For a more detailed description of the Redevelopment Bills and the legal issues addressed in the lawsuit, click here.

Questions regarding the Redevelopment Bills and the related lawsuit may be directed to Lewis Feldman, Chair of Goodwin Procter’s Los Angeles office and head of the firm’s Public Finance Practice, at, (213) 426-2688.

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