SACRAMENTO-In January 2010, the California legislature put forth two separate bills—one that eliminated redevelopment agencies and the second which reinstated them based upon a one-time payment and future smaller annual payments to the state. The court called the elimination of redevelopment “a proper exercise of the legislative power vested in the Legislature by the state Constitution.”

This week, the California Supreme Court ruled invalid the second bill—ABX1 27—that would have reconstituted redevelopment agencies in a different form—a decision that effectively eliminates redevelopment agencies throughout California. According to Renata Simril, managing director for Jones Lang LaSalle’s public institutions practice covering the Southwest region where she advises redevelopment agencies and other government entities, without further legislative action, there will be no new redevelopment projects in the state and redevelopment agencies must create successor agencies to unwind from pending and/or pipelined development and/or infrastructure project obligations—which could mean land sales and other disposition strategies.

The decision by the court, she says, also calls into question the future economic development strategy of more than 400 large and small cities and counties up and down the state of California and more importantly, Simril says, “the funding incentives for affordable housing and job creating projects in some of the State’s most challenged and underserved communities.”