The California Supreme Court issued a ruling upholding a law that eliminated redevelopment agencies throughout the State.  This closely watched lawsuit stemmed from two measures passed by the Legislature last summer to help close California’s budget deficit.  The first measure eliminated more than 400 redevelopment agencies that were funded by property tax dollars.  The second measure allowed these agencies to continue operations but only on the condition that they share part of their property tax revenue with the State.  Although the Court upheld the law eliminating redevelopment agencies, the Court struck down the second measure.

The Court’s ruling is undoubtedly a blow to cities and counties across the State who rely on redevelopment money to fund improvement projects within their communities.  Thus, public agencies who are already facing financial difficulty should be prepared to deal with additional challenges that may result from the Court’s ruling.  Agencies facing these issues should consider the following points.

Agencies should be prepared to handle questions from the media and employees about the impact of the Court’s ruling on their financial condition.  For example, questions regarding possible layoff or cuts to public services may arise.  Because of increased scrutiny of public agencies in this “post-Bell” era, agencies must carefully evaluate the impact the Court’s ruling will have on them before responding to any inquiries, and carefully scrutinize how they will address these issues publicly.

If layoffs are being considered, agencies are reminded to review any language relating to layoffs contained in memorandums of understanding, personnel rules and other policies.  Agencies should pay specific attention to layoff procedures including any timelines associated with the layoff process and the manner in which employees are selected for layoff.  In addition, the agency may have to meet and confer with the bargaining units of represented employees before initiating any layoffs.  Agencies should also think about how the layoffs will be communicated to employees.

Finally, the loss of redevelopment funding could trigger the need to seek additional cuts through labor negotiations.  Consequently, agencies should prepare a budget summary regarding the agency’s financial condition.  In addition, agencies should familiarize themselves with language in the memorandums of understanding regarding re-opening negotiations and the timeline for conducting negotiations especially in light of the new requirements under AB 646.

If you have questions, please contact our Los Angeles, San Francisco, Fresno, or San Diego office.