Press Releases

MHA Team Secures Redevelopment Funds

SACRAMENTO, May 21, 2009  -  May 10, 2009 stood to be more financially painful for California’s redevelopment agencies than “tax day” for corporate executives. Assembly Bill 1389, an outgrowth of last summer’s budget compromise and aimed at helping to plug the state’s multi-billion dollar shortfall, called for California redevelopment agencies to pay $350 million to County Educational Revenue Augmentation Funds ("ERAF") on May 10. This shift of money from redevelopment agencies to schools would have resulted in an equivalent reduction in the liability of the State to fund education under Proposition 98. But, working on behalf of the California Redevelopment Association, McDonough attorneys Brent Hawkins, Dick Brandt and Ann Schwing, disputed AB 1389 as unconstitutional, and on April 30, Sacramento County Superior Court Judge Lloyd Connelly ruled that local redevelopment agencies should not make the bill-required payments. Therefore, redevelopment agencies will keep these much-needed funds.

In the ruling, Connelly wrote that AB 1389 “in its general and ordinary operation, inevitably conflicts with and violates the terms and intent of Section 16, to allocate tax increment revenues to the financing of redevelopment projects.”

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