Court Opinion

ID: 844233
Source: CourtListenerOpinion
Date Created: 2013-03-01 22:47:46.776218+00
Date Added: 2024-06-11T12:40:00.869143
License: Public Domain

Filed 12/29/11

      IN THE SUPREME COURT OF CALIFORNIA

CALIFORNIA REDEVELOPMENT                )
ASSOCIATION et al.,                     )
                                        )
           Petitioners,                 )
                                        )                         S194861
           v.                           )
                                        )
ANA MATOSANTOS, as Director, etc.,      )
et al.,                                 )
                                        )
           Respondents;                 )
                                        )
COUNTY OF SANTA CLARA et al.,           )
                                        )
           Interveners and Respondents. )
____________________________________)

        Responding to a declared state fiscal emergency, in the summer of 2011 the
Legislature enacted two measures intended to stabilize school funding by reducing
or eliminating the diversion of property tax revenues from school districts to the
state‘s community redevelopment agencies. (Assem. Bill Nos. 26 & 27 (2011-
2012 1st Ex. Sess.) enacted as Stats. 2011, 1st Ex. Sess. 2011-2012, chs. 5-6
(hereafter Assembly Bill 1X 26 and Assembly Bill 1X 27); see also Assem. Bill
1X 26, § 1, subds. (d)-(i); Assem. Bill 1X 27, § 1, subds. (b), (c).) Assembly Bill
1X 26 bars redevelopment agencies from engaging in new business and provides
for their windup and dissolution. Assembly Bill 1X 27 offers an alternative:
redevelopment agencies can continue to operate if the cities and counties that

                                         1
created them agree to make payments into funds benefiting the state‘s schools and
special districts.
       The California Redevelopment Association, the League of California
Cities, and other affected parties (collectively the Association) promptly sought
extraordinary writ relief from this court, arguing that each measure was
unconstitutional. They contended the measures violate, inter alia, Proposition 22,
which amended the state Constitution to place limits on the state‘s ability to
require payments from redevelopment agencies for the state‘s benefit. (See Cal.
Const., art. XIII, § 25.5, subd. (a)(7), added by Prop. 22, as approved by voters,
Gen. Elec. (Nov. 2, 2010).) The state‘s Director of Finance, respondent Ana
Matosantos, opposed on the merits but agreed we should put to rest the significant
constitutional questions concerning the validity of both measures.1 We issued an
order to show cause, partially stayed the two measures, and established an
expedited briefing schedule. We also granted leave to the County of Santa Clara
and its auditor-controller, Vinod K. Sharma (collectively Santa Clara), to intervene
as respondents.
       We consider whether under the state Constitution (1) redevelopment
agencies, once created and engaged in redevelopment plans, have a protected right
to exist that immunizes them from statutory dissolution by the Legislature; and
(2) redevelopment agencies and their sponsoring communities have a protected
right not to make payments to various funds benefiting schools and special
districts as a condition of continued operation. Answering the first question ―no‖

1      Two other respondents, state Controller John Chiang and Alameda County
Auditor-Controller Patrick O‘Connell, who was sued on behalf of a putative class
of county auditor-controllers, took no position on the merits. All respondents have
been sued in their official capacities.

                                          2
and the second ―yes,‖ we largely uphold Assembly Bill 1X 26 and invalidate
Assembly Bill 1X 27.
       Assembly Bill 1X 26, the dissolution measure, is a proper exercise of the
legislative power vested in the Legislature by the state Constitution. That power
includes the authority to create entities, such as redevelopment agencies, to carry
out the state‘s ends and the corollary power to dissolve those same entities when
the Legislature deems it necessary and proper. Proposition 22, while it amended
the state Constitution to impose new limits on the Legislature‘s fiscal powers,
neither explicitly nor implicitly rescinded the Legislature‘s power to dissolve
redevelopment agencies. Nor does article XVI, section 16 of the state
Constitution, which authorizes the allocation of property tax revenues to
redevelopment agencies, impair that power.
       A different conclusion is required with respect to Assembly Bill 1X 27, the
measure conditioning further redevelopment agency operations on additional
payments by an agency‘s community sponsors to state funds benefiting schools
and special districts. Proposition 22 (specifically Cal. Const., art. XIII, § 25.5,
subd. (a)(7)) expressly forbids the Legislature from requiring such payments.
Matosantos‘s argument that the payments are valid because technically voluntary
cannot be reconciled with the fact that the payments are a requirement of
continued operation. Because the flawed provisions of Assembly Bill 1X 27 are
not severable from other parts of that measure, the measure is invalid in its
entirety.2

2      Amicus curiae City of Cerritos et al. raises additional constitutional
arguments against the validity of Assembly Bills 1X 26 and 1X 27 based on
provisions neither raised nor briefed by the parties. We do not consider them.

                                           3
                                  I. BACKGROUND

       A. Government Finance: The Integration of State, School, and
          Municipal Financing
       For much of the 20th century, state and local governments were financed
independently under the ―separation of sources‖ doctrine. In 1910, the Legislature
proposed, and the voters approved, a constitutional amendment granting local
governments exclusive control over the property tax. (Cal. Const., art. XIII,
former § 10, enacted by Sen. Const. Amend. No. 1, Gen. Elec. (Nov. 8, 1910); see
Simmons, California Tax Collection: Time for Reform (2008) 48 Santa Clara
L.Rev. 279, 285-286; Ehrman & Flavin, Taxing Cal. Property (4th ed. 2011)
§§ 1:9-1:10, p. 1-14.) Each jurisdiction (city, county, special district, and school
district) could levy its own independent property tax. (See, e.g., Temescal Water
Co. v. Niemann (1913) 22 Cal.App. 174, 176 [―It is conceded . . . that a
municipality has the right to assess all real property found within its limits for the
purpose of maintaining the municipal revenues, and that the county taxing officials
have the right to levy upon the same property for county purposes.‖].)
       This system of finance had significant consequences for education. Under
the state Constitution, the Legislature is obligated to provide for a public school
system. (Cal. Const., art. IX, § 5; Wells v. One2One Learning Foundation (2006)
39 Cal.4th 1164, 1195.) Seeking to promote local involvement, the Legislature
established school districts as political subdivisions and delegated to them that
duty. (Wells, at p. 1195; Butt v. State of California (1992) 4 Cal.4th 668, 680-681;
see also California Teachers Assn. v. Hayes (1992) 5 Cal.App.4th 1513, 1523.)
Historically, school districts were largely funded out of local property taxes.
(Serrano v. Priest (1971) 5 Cal.3d 584, 592 (Serrano I); Serrano v. Priest (1976)
18 Cal.3d 728, 737-738 (Serrano II); see County of Los Angeles v. Sasaki (1994)
23 Cal.App.4th 1442, 1450.) Under the California system of financing as it

                                           4
existed until the 1970‘s, different school districts could levy taxes and generate
vastly different revenues; because of the difference in property values, the same
property tax rate would yield widely differing sums in, for example, Beverly Hills
and Baldwin Park. (Serrano I, at pp. 592-594.)
       We invalidated that system of financing in Serrano I and Serrano II,
holding that education was a fundamental interest (Serrano I, supra, 5 Cal.3d at
pp. 608-609; Serrano II, supra, 18 Cal.3d at pp. 765-766) and that financing
heavily dependent on local property tax bases denied students equal protection
(Serrano I, at pp. 614-615; Serrano II, at pp. 768-769, 776). The Serrano
decisions threw ―the division of state and local responsibility for educational
funding‖ into ― ‗a state of flux.‘ ‖ (Los Angeles Unified School Dist. v. County of
Los Angeles (2010) 181 Cal.App.4th 414, 419.) In their aftermath, a ―Byzantine‖
system of financing (California Teachers Assn. v. Hayes, supra, 5 Cal.App.4th at
p. 1525) evolved in which the state became the principal financial backstop for
local school districts. Funding equalization was achieved by capping individual
districts‘ abilities to raise revenue and enhancing state contributions to ensure
minimum funding levels. (Lockard, In the Wake of Williams v. State: The Past,
Present, and Future of Education Finance Litigation in California (2005) 57
Hastings L.J. 385, 388-391; see generally Wells v. One2One Learning Foundation,
supra, 39 Cal.4th at p. 1194 [discussing current funding regime].)
       A second event of seismic significance followed shortly after, with the
voters‘ 1978 adoption of Proposition 13. (Cal. Const., art. XIII A, added by
Prop. 13, as approved by voters, Primary Elec. (June 6, 1978).) As noted, before
1978 cities and counties had been able to levy their own property taxes.
Proposition 13 capped ad valorem real property taxes imposed by all local entities
at 1 percent (Cal. Const., art. XIII A, § 1, subd. (a)), reducing the amount of
revenue available by more than half (Stark, The Right to Vote on Taxes (2001)

                                          5
96 Nw.U. L.Rev. 191, 198). In place of multiple property taxes imposed by
multiple political subdivisions, it substituted a single tax to be collected by
counties and thereafter apportioned. (Cal. Const., art. XIII A, § 1, subd. (a).)
Significantly, Proposition 13 did not specify how that 1 percent was to be divided,
instead leaving the method of allocation to state law. (See Cal. Const., art. XIII A,
§ 1, subd. (a) [real property tax is ―to be . . . apportioned according to law to the
districts within the counties‖]; Amador Valley Joint Union High Sch. Dist. v. State
Bd. of Equalization (1978) 22 Cal.3d 208, 225-227; County of Los Angeles v.
Sasaki, supra, 23 Cal.App.4th at pp. 1454-1457; City of Rancho Cucamonga v.
Mackzum (1991) 228 Cal.App.3d 929, 945.)
       Proposition 13 transformed the government financing landscape in at least
three ways relevant to this case. First, by capping local property tax revenue, it
greatly enhanced the responsibility the state would bear in funding government
services, especially education. (See County of Los Angeles v. Sasaki, supra,
23 Cal.App.4th at pp. 1451-1452; California Teachers Assn. v. Hayes, supra,
5 Cal.App.4th at pp. 1527-1528.) Second, by failing to specify a method of
allocation, Proposition 13 largely transferred control over local government
finances from the state‘s many political subdivisions to the state, converting the
property tax from a nominally local tax to a de facto state-administered tax subject
to a complex system of intergovernmental grants. (See Rev. & Tax. Code, § 95
et seq.; Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization,
supra, 22 Cal.3d at pp. 226-227; Sasaki, at pp. 1454-1455; Stark, The Right to
Vote on Taxes, supra, 96 Nw.U. L.Rev. at p. 198.)3 Third, by imposing a unified,

3       State law dictates the formulas county auditor-controllers are to apply in
allocating the property tax among cities, counties, special districts, and school
districts. Setting aside for the moment the portion of the property tax going to
                                                            (footnote continued on next page)

                                           6
shared property tax, Proposition 13 created a zero-sum game in which political
subdivisions (cities, counties, special districts, and school districts) would have to
compete against each other for their slices of a greatly shrunken pie.
         In 1988, the voters added another wrinkle with Proposition 98, which
established constitutional minimum funding levels for education and required the
state to set aside a designated portion of the General Fund for public schools.
(Cal. Const., art. XVI, § 8; see Los Angeles Unified School Dist. v. County of Los
Angeles, supra, 181 Cal.App.4th at p. 420; California Teachers Assn. v. Hayes,
supra, 5 Cal.App.4th at pp. 1517-1518.) Two years later, the voters revised and
effectively increased the minimum funding requirements for public schools.
(Prop. 111, Primary Elec. (June 5, 1990) amending Cal. Const., art. XVI, § 8; see
County of Sonoma v. Commission on State Mandates (2000) 84 Cal.App.4th 1264,
1289.)
         In response to these rising educational demands on the state treasury, the
Legislature in 1992 created county educational revenue augmentation funds
(ERAF‘s). (Stats. 1992, chs. 699, 700, pp. 3081-3125; Rev. & Tax. Code, §§ 97.2,
97.3; see Los Angeles Unified School Dist. v. County of Los Angeles, supra, 181
Cal.App.4th at pp. 420-421; City of El Monte v. Commission on State Mandates
(2000) 83 Cal.App.4th 266, 272-274; County of Los Angeles v. Sasaki, supra,
23 Cal.App.4th at p. 1447.) It reduced the portion of property taxes allocated to
local governments, deposited the difference in the ERAF‘s, deemed the balances
part of the state‘s General Fund for purposes of satisfying Proposition 98

(footnote continued from previous page)
redevelopment agencies, roughly 57 percent of the remainder goes to schools,
21 percent to counties, 12 percent to cities, and 10 percent to special districts.
(Legis. Analyst‘s Off., The 2011-2012 Budget: Should California End
Redevelopment Agencies? (Feb. 9, 2011) p. 10.)

                                           7
obligations, and distributed these amounts to school districts. (County of Sonoma
v. Commission on State Mandates, supra, 84 Cal.App.4th at pp. 1275-1276; see
Los Angeles Unified School Dist. v. County of Los Angeles, supra, 181
Cal.App.4th at p. 426 [ERAF‘s are an ― ‗accounting device‘ ‖ for reallocating
property taxes to school districts from other local government entities].)
Periodically thereafter, the Legislature through supplemental legislation required
local government entities to further contribute to the ERAF‘s in order to defray the
state‘s Proposition 98 school funding obligations. (Los Angeles Unified School
Dist., at pp. 420-421.) Local governments had no vested right to property taxes
(id. at p. 425); accordingly, the Legislature could require ERAF payments as ―an
exercise of [its] authority to apportion property tax revenues.‖ (City of El Monte,
at p. 280; see Cal. Const., art. XIII A, § 1, subd. (a).)
        B. Redevelopment Agencies
        In the aftermath of World War II, the Legislature authorized the formation
of community redevelopment agencies in order to remediate urban decay. (Stats.
1945, ch. 1326, p. 2478 et seq. [Community Redevelopment Act]; Stats. 1951,
ch. 710, p. 1922 et seq. [codifying and renaming the Community Redevelopment
Law, Health & Saf. Code, § 33000 et seq.];4 see Cal. Const., art. XVI, § 16.) The
Community Redevelopment Law ―was intended to help local governments
revitalize blighted communities.‖ (City of Cerritos v. Cerritos Taxpayers Assn.
(2010) 183 Cal.App.4th 1417, 1424; see Marek v. Napa Community
Redevelopment Agency (1988) 46 Cal.3d 1070, 1082.) It has since become a
principal instrument of economic development, mostly for cities, with nearly
400 redevelopment agencies now active in California.

4       All further unlabeled statutory references are to the Health and Safety
Code.

                                            8
       A redevelopment agency may be (and usually is) governed by the
sponsoring community‘s own legislative body. (§ 33200; Coomes et al.,
Redevelopment in California (4th ed. 2009) pp. 21-23.)5 An agency is authorized
to ―prepare and carry out plans for the improvement, rehabilitation, and
redevelopment of blighted areas.‖ (§ 33131, subd. (a).) To carry out such
redevelopment plans, agencies may acquire real property, including by the power
of eminent domain (§ 33391, subd. (b)), dispose of property by lease or sale
without public bidding (§§ 33430, 33431), clear land and construct infrastructure
necessary for building on project sites (§§ 33420, 33421), and undertake certain
improvements to other public facilities in the project area (§ 33445). While
redevelopment agencies have used their powers in a wide variety of ways, in one
common type of project the redevelopment agency buys and assembles parcels of
land, builds or enhances the site‘s infrastructure, and transfers the land to private
parties on favorable terms for residential and/or commercial development.
(Coomes, pp. 16-19; see, e.g., Marek v. Napa Community Redevelopment Agency,
supra, 46 Cal.3d at p. 1075.)
       Redevelopment agencies generally cannot levy taxes. (Huntington Park
Redevelopment Agency v. Martin (1985) 38 Cal.3d 100, 106; City of Cerritos v.
Cerritos Taxpayers Assn., supra, 183 Cal.App.4th at p. 1424; City of El Monte v.
Commission on State Mandates, supra, 83 Cal.App.4th at p. 269.) Instead, they
rely on tax increment financing, a funding method authorized by article XVI,
section 16 of the state Constitution and section 33670 of the Health and Safety
Code. (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 866; City of El

5     According to the Association‘s evidence, more than 98 percent of all
redevelopment agencies are governed by a board consisting of the county board of
supervisors or city council that created the agency.

                                           9
Monte, at pp. 269-270.) Under this method, those public entities entitled to
receive property tax revenue in a redevelopment project area (the cities, counties,
special districts, and school districts containing territory in the area) are allocated a
portion based on the assessed value of the property prior to the effective date of
the redevelopment plan. Any tax revenue in excess of that amount—the tax
increment created by the increased value of project area property—goes to the
redevelopment agency for repayment of debt incurred to finance the project.
(Cal. Const., art. XVI, § 16, subds. (a), (b); § 33670, subds. (a), (b); City of
Dinuba, at p. 866.) In essence, property tax revenues for entities other than the
redevelopment agency are frozen, while revenue from any increase in value is
awarded to the redevelopment agency on the theory that the increase is the result
of redevelopment. (City of Cerritos, at p. 1424.)
       The property tax increment revenue received by a redevelopment agency
must be held in a special fund for repayment of indebtedness (§ 33670, subd. (b)),
but the law does not restrict the amount of tax increment received in a given year
to that needed for loan repayments in that year. (Marek v. Napa Community
Redevelopment Agency, supra, 46 Cal.3d at p. 1083.) The only limit on the annual
increment payment received is that it may not exceed the agency‘s total debt, less
its revenue on hand. (§ 33675, subd. (g).) Once the entire debt incurred for a
project has been repaid, all property tax revenue in the project area is allocated to
local taxing agencies according to the ordinary formula. (§ 33670, subd. (b).)
       A powerful and flexible tool for community economic development, tax
increment financing nonetheless ―has sometimes been misused to subsidize a
city‘s economic development through the diversion of property tax revenues from
other taxing entities . . . .‖ (Lancaster Redevelopment Agency v. Dibley (1993)
20 Cal.App.4th 1656, 1658; see Regus v. City of Baldwin Park (1977) 70
Cal.App.3d 968, 981-983.) This practice became more common in the era of

                                           10
constricted local tax revenue that followed the passage of Proposition 13. Some
small cities with blighted areas available for industrial redevelopment ―were able
to shield virtually all of their property tax revenue from other government
agencies,‖ but ―[e]ven in ordinary cities . . . the temptation to use redevelopment
as a financial weapon was considerable. Because it limited increases in property
tax rates, Proposition 13 created a kind of shell game among local government
agencies for property tax funds. The only way to obtain more funds was to take
them from another agency. Redevelopment proved to be one of the most powerful
mechanisms for gaining an advantage in the shell game.‖ (Fulton & Shigley,
Guide to California Planning (3d ed. 2005) pp. 263-264.) Today, redevelopment
agencies receive 12 percent of all property tax revenue in the state. (See Assem.
Bill 1X 26, § 1, subd. (f); Legis. Analyst‘s Off., The 2011-2012 Budget: Should
California End Redevelopment Agencies?, supra, p. 1.)
       Addressing these concerns, the Legislature has required redevelopment
agencies to make certain transfers of their tax increment revenue for other local
needs. First, 20 percent of the revenue generally must be deposited in a fund for
provision of low and moderate income housing. (§§ 33334.2, 33334.3, 33334.6;
see City of Cerritos v. Cerritos Taxpayers Assn., supra, 183 Cal.App.4th at
p. 1424.) Second, redevelopment agencies must make a graduated series of pass-
through payments to local government taxing agencies such as cities, counties, and
school districts from tax increment on projects adopted or expanded after 1994.
(§ 33607.5, subd. (a)(2); see Los Angeles Unified School Dist. v. County of Los
Angeles, supra, 181 Cal.App.4th at pp. 421-422.) The payments are distributed
according to the taxing agencies‘ ordinary shares of property taxes. (Id. at
pp. 422-423.)
       Of greatest relevance here, the Legislature has often required
redevelopment agencies, like cities and counties, to make ERAF payments for the

                                         11
benefit of school and community college districts. (See §§ 33680, 33681.7 to
33681.15, 33685 to 33692; former § 33681 (Stats. 1992, ch. 700, § 1.5, pp. 3115-
3116); former § 33681.5 (Stats. 1993, ch. 68, § 4, pp. 942-944); Los Angeles
Unified School Dist. v. County of Los Angeles, supra, 181 Cal.App.4th at p. 421;
City of El Monte v. Commission on State Mandates, supra, 83 Cal.App.4th at
pp. 272-274.) In each of the 2004-2005 and 2005-2006 fiscal years,
redevelopment agencies were charged amounts intended to generate a combined
$250 million. (§ 33681.12, subd. (a)(2).) In the 2008-2009 fiscal year, the
Legislature required a combined $350 million or 5 percent of the total statewide
tax increment allocated to redevelopment agencies under section 33670,
whichever was greater, to be transferred to ERAF‘s (§ 33685, subd. (a)(2)),
although that revenue shift was ultimately invalidated in litigation. (Cal.
Redevelopment Assn. v. Genest (Super. Ct. Sac. County, 2009, No. 34-2008-
00028334-CU-WM-GDS.) Similar provisions for shifts of tax increment revenue
in the 2009-2010 and 2010-2011 fiscal years (§§ 33690, 33690.5) are the subjects
of pending litigation.
       Tax increment financing remains a source of contention because of the
financial advantage it provides redevelopment agencies and their community
sponsors, primarily cities, over school districts and other local taxing agencies.
Additionally, because of the state‘s obligations to equalize public school funding
across districts (Ed. Code, § 42238 et seq.) and to fund all public schools at
minimum levels set by Proposition 98 (Cal. Const., art. XVI, § 8), the loss of
property tax revenue by school and community college districts creates obligations
for the state‘s General Fund. (See Los Angeles Unified School Dist. v. County of
Los Angeles, supra, 181 Cal.App.4th at pp. 419-422; Lefcoe, Finding the Blight
That’s Right for California Redevelopment Law (2001) 52 Hastings L.J. 991, 999
[―[W]here cities and counties shift property taxes from schools to redevelopment

                                         12
projects, the state must make up the difference . . . .‖].) The effect of tax
increment financing on school districts‘ property tax revenues has thus become a
point of fiscal conflict between California‘s community redevelopment agencies
and the state itself, a conflict manifesting in the current dispute.
       C. Propositions 1A and 22
       In addition to sporadically shifting property tax revenue from local
governments to schools via ERAF‘s, the state in 1999 rolled back the vehicle
license fee, a tax traditionally relied on by local governments and constitutionally
allocated to cities and counties. (Supplemental Voter Information Guide, Gen.
Elec. (Nov. 2, 2004) Legis. Analyst‘s analysis of Prop. 1A, p. 5; see Cal. Const.,
art. XI, § 15.) Though the state committed to backfill this lost revenue with
payments from the General Fund, in 2004 it deferred the replacement payments.
(Supplemental Voter Information Guide, Gen. Elec. (Nov. 2, 2004) Legis.
Analyst‘s analysis of Prop. 1A, p. 5.) Also in 2004, the state reduced local
government‘s share of the sales tax by 0.25 percent, while making up for the lost
revenue with additional property tax allocations, in order to permit the issuance of
new state bonds. (See Rev. & Tax. Code, §§ 97.68, 7203.1; Gov. Code, § 99050
et seq.)
       Local government interests responded to these fluctuations in their revenue
sources by qualifying for the ballot Proposition 65, a set of constitutional
amendments to restrict such state actions in the future, but they subsequently
agreed to support a compromise measure, Proposition 1A, instead. (Supplemental
Voter Information Guide, Gen. Elec. (Nov. 2, 2004) argument against Prop. 65,
p. 15; see id., Legis. Analyst‘s analysis of Prop. 1A, pp. 4-6.) The voters approved
Proposition 1A and rejected Proposition 65. Among its reforms, Proposition 1A
prevented the state from statutorily reducing or altering the existing allocations of
property tax among cities, counties, and special districts. (Cal. Const., art. XIII,

                                           13
§ 25.5, subd. (a)(1), (3).) Unlike Proposition 65, however, Proposition 1A did not
extend its protections to redevelopment agencies. (See Cal. Const., art. XIII,
§ 25.5, subd. (b)(2); Rev. & Tax. Code, § 95, subd. (a) [omitting redevelopment
agencies from the definition of a local agency]; Supplemental Voter Information
Guide, Gen. Elec. (Nov. 2, 2004) Legis. Analyst‘s analysis of Prop. 1A, p. 7
[contrasting the two measures and expressly noting that ―Proposition 1A’s
restrictions do not apply to redevelopment agencies‖]; id., text of Prop. 65, p. 18
[including redevelopment agencies in its definition of protected special districts].)
       In November 2010, following further legislative requirements that
redevelopment agencies make ERAF payments, the voters approved Proposition
22. Among the initiative‘s many statutory and constitutional revisions, one is
most central to the Association‘s argument: the addition of section 25.5,
subdivision (a)(7) to article XIII of the state Constitution. That provision limits
what the Legislature may do with respect to redevelopment agency tax increment:
―(a) On or after November 3, 2004, the Legislature shall not enact a statute to do
any of the following: [¶] . . . [¶] (7) Require a community redevelopment agency
(A) to pay, remit, loan, or otherwise transfer, directly or indirectly, taxes on ad
valorem real property and tangible personal property allocated to the agency
pursuant to Section 16 of Article XVI to or for the benefit of the State, any agency
of the State, or any jurisdiction; or (B) to use, restrict, or assign a particular
purpose for such taxes for the benefit of the State, any agency of the State, or any
jurisdiction,‖ with two exceptions not pertinent here. We address section 25.5,
subdivision (a)(7) in more detail below. (See post, pts. II.B.1., II.C.)
       D. Assembly Bills 1X 26 and IX 27
       In December 2010, then Governor Schwarzenegger declared a state fiscal
emergency. (See Cal. Const., art. IV, § 10, subd. (f)(1).) On January 20, 2011,
incoming Governor Brown renewed the declaration and convened a special

                                           14
session of the Legislature to address the state‘s budget crisis. (Legis. Counsel‘s
Digest, Assem. Bill 1X 26; see also Professional Engineers in California
Government v. Schwarzenegger (2010) 50 Cal.4th 989, 1001-1002 [detailing the
ongoing crisis].)
       As a partial means of closing the state‘s projected $25 billion operating
deficit, Governor Brown originally proposed eliminating redevelopment agencies
entirely. (See Legis. Analyst‘s Off., Governor‘s Redevelopment Proposal
(Jan. 18, 2011) p. 4.) Parallel bills were introduced in the Senate and Assembly to
―eliminate[] redevelopment agencies (RDAs) and specif[y] a process for the
orderly wind-down of RDA activities . . . .‖ (Sen. Rules Com., Off. of Sen. Floor
Analyses, analysis of Sen. Bill No. 77 (2011-2012 Reg. Sess.) as amended
Mar. 15, 2011, p. 1; Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading
analysis of Assem. Bill No. 101 (2011-2012 Reg. Sess.) as amended Mar. 15,
2011, p. 1.) Ultimately, however, the Legislature took a slightly different
approach; in June 2011 it passed, and the Governor signed, the two measures we
consider here.
       Assembly Bills 1X 26 and IX 27 consist of three principal components,
codified as new parts 1.8, 1.85 (both Assem. Bill 1X 26) and 1.9 (Assem. Bill
1X 27) of division 24 of the Health and Safety Code. Part 1.8 (§§ 34161 to
34169.5) is the ―freeze‖ component: it subjects redevelopment agencies to
restrictions on new bonds or other indebtedness; new plans or changes to existing
plans; and new partnerships, including joint powers authorities (§§ 34162 to
34165). Cities and counties are barred from creating any new redevelopment
agencies. (§ 34166.) Existing obligations are unaffected; redevelopment agencies
may continue to make payments and perform existing obligations until other
agencies take over. (§ 34169.) Part 1.8‘s purpose is to preserve redevelopment
agency assets and revenues for use by ―local governments to fund core

                                         15
governmental services‖ such as fire protection, police, and schools. (§ 34167,
subd. (a).)
       Part 1.85 (§§ 34170 to 34191) is the dissolution component. It dissolves all
redevelopment agencies (§ 34172) and transfers control of redevelopment agency
assets to successor agencies, which are contemplated to be the city or county that
created the redevelopment agency (§§ 34171, subd. (j), 34173, 34175, subd. (b)).
Part 1.85 requires successor agencies to continue to make payments and perform
existing obligations. (§ 34177.) However, unencumbered balances of
redevelopment agency funds must be remitted to the county auditor-controller for
distribution to cities, the county, special districts, and school districts in proportion
to what each agency would have received absent the redevelopment agencies.
(See §§ 34177, subd. (d), 34183, subd. (a)(4), 34188.) Proceeds from
redevelopment agency asset sales likewise must go to the county auditor-controller
for similar distribution. (§ 34177, subd. (e).) Finally, tax increment revenues that
would have gone to redevelopment agencies must be deposited in a local trust
fund each county is required to create and administer. (§§ 34170.5, subd. (b),
34182, subd. (c)(1).) All amounts necessary to satisfy administrative costs, pass-
through payments, and enforceable obligations will be allocated for those
purposes, while any excess will be deemed property tax revenue and distributed in
the same fashion as balances and assets. (§§ 34172, subd. (d), 34183, subd. (a).)
       Part 1.9 (§§ 34192 to 34196), however, offers an exemption from
dissolution for cities and counties that agree to make specified payments to both
the county ERAF and a new county special district augmentation fund on behalf of
their redevelopment agencies. Each city or county choosing this option must
notify the state it will do so and pass an ordinance to that effect. (§§ 34193, subd.
(b), 34193.1.) If it does, its redevelopment agency will be permitted to continue in
operation without interruption, as is, under the Community Redevelopment Law.

                                           16
(§ 34193, subd. (a).) The amounts owed are to be calculated annually by the
state‘s Director of Finance based on the fractional share of net and gross statewide
tax increment each redevelopment agency has received in prior years, multiplied
by $1.7 billion for this fiscal year and $400 million for all subsequent fiscal years.
(§ 34194, subds. (b)(2), (c)(1)(A).)6
       Payments are due on January 15 and May 15 each year. (§ 34194, subd.
(d)(1).) While remittances are nominally owed by cities and counties, the measure
authorizes each community sponsor to contract with its redevelopment agency to
receive tax increment in the amount owed, so that payments may effectively come
from tax increment. (§ 34194.2.) Finally, any lapse in payments will result in a
redevelopment agency‘s dissolution. (§ 34195.)
       On August 17, 2011, we stayed parts 1.85 and 1.9, with minor exceptions,
to prevent redevelopment agencies from being dissolved during the pendency of
this matter. (Health & Saf. Code, div. 24, pts. 1.85, 1.9.)
                                   II. DISCUSSION
       A. Jurisdiction
       Santa Clara pleads as an affirmative defense that we lack jurisdiction.
Though it does not further argue the point, we have an independent obligation in
this as in every matter to confirm whether jurisdiction exists. (See Walker v.
Superior Court (1991) 53 Cal.3d 257, 267; Abelleira v. District Court of Appeal

6       It follows that, if all redevelopment agency sponsors opted in and paid their
pro rata shares, Assembly Bill 1X 27 would generate $1.7 billion in 2011-2012
and $400 million in each subsequent fiscal year. Of these sums, $4.3 million is
scheduled to go to transit and fire districts in 2011-2012 and $60 million in each
subsequent year, with the balance going to schools and community colleges via
the ERAF. (§ 34194.4, subd. (a).) ERAF payments in 2011-2012 count against
the state‘s Proposition 98 obligations; in future years, they do not. (§ 34194.1,
subds. (b), (c).)

                                          17
(1941) 17 Cal.2d 280, 302-303; Linnick v. Sedelmeier (1968) 262 Cal.App.2d 12,
12; see also Marbury v. Madison (1803) 5 U.S. 137, 173-175.) Assembly Bill
1X 26 provides that ―[n]otwithstanding any other law, any action contesting the
validity of this part [1.8] or Part 1.85 . . . or challenging acts taken pursuant to
these parts shall be brought in the Superior Court of the County of Sacramento.‖
(§ 34168, subd. (a).) We conclude this provision does not deprive us of
jurisdiction.
        In filing a petition for writ of mandate with this court in the first instance,
the Association has asked us to invoke our original jurisdiction. That jurisdiction
is constitutional. (Cal. Const., art. VI, § 10 [vesting the Supreme Ct. with original
jurisdiction ―in proceedings for extraordinary relief in the nature of mandamus,
certiorari, and prohibition‖].) It may not be diminished by statute. (Chinn v.
Superior Court (1909) 156 Cal. 478, 480 [―[W]here the judicial power of courts,
either original or appellate, is fixed by constitutional provisions, the legislature
cannot either limit or extend that jurisdiction.‖]; see also Modern Barber Col. v.
Cal. Emp. Stab. Com. (1948) 31 Cal.2d 720, 731; Standard Oil Co. v. State Board
of Equal. (1936) 6 Cal.2d 557, 562; Lemen v. Edmunson (1927) 202 Cal. 760,
762.)
        The Legislature does retain the power to regulate matters of judicial
procedure. (Powers v. City of Richmond (1995) 10 Cal.4th 85, 98-110; Modern
Barber Col. v. Cal. Emp. Stab. Com., supra, 31 Cal.2d at p. 731.) In some
instances, the exercise of that power may appear to ―defeat or interfere with the
exercise of jurisdiction or of the judicial power‖ and thus come into tension with
the general prohibition against impairing a constitutional grant of jurisdiction.
(Garrison v. Rourke (1948) 32 Cal.2d 430, 436.) We avoid such constitutional
conflicts whenever possible by construing legislative enactments strictly against
the impairment of constitutional jurisdiction: ― ‗[A]n intent to defeat the exercise

                                           18
of the court‘s jurisdiction will not be supplied by implication.‘ ‖ (County of San
Diego v. State of California (1997) 15 Cal.4th 68, 87, quoting Garrison, at p. 436;
see also Garrison, at p. 435 [―The jurisdiction thus vested [by Cal. Const., art. VI]
may not lightly be deemed to have been destroyed.‖].)
       To avoid intrusion on our constitutional jurisdiction, section 34168,
subdivision (a) is best read narrowly as applying only to, and designating a forum
for, ―action[s]‖ (ibid.), over which we retain appellate jurisdiction, while having
no bearing on jurisdiction over ―special proceedings‖ such as petitions for writs of
mandate (see Public Defenders’ Organization v. County of Riverside (2003) 106
Cal.App.4th 1403, 1409; compare Code Civ. Proc., pt. 2, § 307 et seq. [regulating
civil actions] with Code Civ. Proc., pt. 3, § 1063 et seq. [regulating special
proceedings of a civil nature]). It follows that, notwithstanding the fact the
Association‘s petition challenges the validity of parts 1.8 and 1.85 of division 24
of the Health and Safety Code, we have jurisdiction to address it.
       We will invoke our original jurisdiction where the matters to be decided are
of sufficiently great importance and require immediate resolution. (E.g., Strauss v.
Horton (2009) 46 Cal.4th 364, 398-399; Raven v. Deukmejian (1990) 52 Cal.3d
336, 340; Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization,
supra, 22 Cal.3d at p. 219.) Those circumstances are present here: Assembly
Bills 1X 26 and 1X 27 place the state‘s nearly 400 redevelopment agencies under
threat of imminent dissolution, while the Association‘s petition calls into question
the proper allocation of billions of dollars in property tax revenue.

       B. The Constitutionality of Assembly Bill 1X 26
       We turn now to the merits. In assessing the validity of Assembly Bills
1X 26 and 1X 27, we are mindful that ―all intendments favor the exercise of the
Legislature‘s plenary authority: ‗If there is any doubt as to the Legislature‘s

                                          19
power to act in any given case, the doubt should be resolved in favor of the
Legislature‘s action. Such restrictions and limitations [imposed by the
Constitution] are to be construed strictly, and are not to be extended to include
matters not covered by the language used.‘ [Citations.]‖ (Methodist Hosp. of
Sacramento v. Saylor (1971) 5 Cal.3d 685, 691.)

               1. The Dissolution of Redevelopment Agencies Under Part 1.85 of
                  Division 24 of the Health and Safety Code
       In enacting Assembly Bill 1X 26, the Legislature asserted that
―[r]edevelopment agencies were created by statute and can therefore be dissolved
by statute.‖ (Assem. Bill 1X 26, § 1, subd. (h).) We conclude the Legislature was
correct.
       At the core of the legislative power is the authority to make laws.
(Nougues v. Douglass (1857) 7 Cal. 65, 70 [―The legislative power is the creative
element in the government . . . . [It] makes the laws . . . .‖].) The state
Constitution vests that power, except as exercised by or reserved to the people
themselves, in the Legislature. (Cal. Const., art. IV, § 1; McClung v. Employment
Development Dept. (2004) 34 Cal.4th 467, 472; Nougues, at p. 69 [―[I]n all cases
where not exercised and not reserved, all the legislative power of the people of the
State is vested in the Legislature . . .‖ (italics omitted)].)
       Of significance, the legislative power the state Constitution vests is plenary.
Under it, ―the entire law-making authority of the state, except the people‘s right of
initiative and referendum, is vested in the Legislature, and that body may exercise
any and all legislative powers which are not expressly or by necessary implication
denied to it by the Constitution.‖ (Methodist Hosp. of Sacramento v. Saylor,
supra, 5 Cal.3d at p. 691; see also Marine Forests Society v. California Coastal

                                            20
Com. (2005) 36 Cal.4th 1, 31; People v. Tilton (1869) 37 Cal. 614, 626 [under the
state Const., ―[f]ull power exists when there is no limitation.‖].)7
       We thus start from the premise that the Legislature possesses the full extent
of the legislative power and its enactments are authorized exercises of that power.
Only where the state Constitution withdraws legislative power will we conclude
an enactment is invalid for want of authority. ―In other words, ‗we do not look to
the Constitution to determine whether the legislature is authorized to do an act, but
only to see if it is prohibited.‘ ‖ (Methodist Hosp. of Sacramento v. Saylor, supra,
5 Cal.3d at p. 691, quoting Fitts v. Superior Court (1936) 6 Cal.2d 230, 234;
accord, State Personnel Bd. v. Department of Personnel Admin. (2005) 37 Cal.4th
512, 523; County of Riverside v. Superior Court (2003) 30 Cal.4th 278, 284.)
       A corollary of the legislative power to make new laws is the power to
abrogate existing ones. What the Legislature has enacted, it may repeal. (See
People v. Superior Court (Romero) (1996) 13 Cal.4th 497, 518 [if a ―power is
statutory, the Legislature may eliminate it‖]; Estate of Potter (1922) 188 Cal. 55,
63 [rights that ―are creatures of legislative will‖ may be withdrawn by the
Legislature]; County of Sacramento v. Lackner (1979) 97 Cal.App.3d 576, 589
[― ‗ ―Every legislative body may modify or abolish the acts passed by itself or its
predecessors.‖ ‘ ‖].)
       In particular, if a political entity has been created by the Legislature, it can
be dissolved by the Legislature, barring some specific constitutional obstacle to a
particular exercise of the legislative power. ―In our federal system the states are

7       In this regard, the state and federal Constitutions operate in very different
ways. Whereas under the federal Constitution, Congress has only those powers
that are expressly granted to it, under the state Constitution, the Legislature has all
legislative powers except those that are expressly withdrawn from it. (Methodist
Hosp. of Sacramento v. Saylor, supra, 5 Cal.3d at p. 691.)

                                          21
sovereign but cities and counties are not; in California as elsewhere they are mere
creatures of the state and exist only at the state‘s sufferance.‖ (Board of
Supervisors v. Local Agency Formation Com. (1992) 3 Cal.4th 903, 914; see also
City of El Monte v. Commission on State Mandates, supra, 83 Cal.App.4th at
p. 279 [―Only the state is sovereign and, in a broad sense, all local governments,
districts, and the like are subdivisions of the state.‖].) It follows from the
fundamental nature of this relationship between a state and its political
subdivisions that ― ‗states have ―extraordinarily wide latitude . . . in creating
various types of political subdivisions and conferring authority upon them.‖
[Citation.]‘ ‖ (Board of Supervisors, at pp. 915-916.) As the United States
Supreme Court has recognized in the context of municipal corporations: ―The
number, nature and duration of the powers conferred upon these corporations and
the territory over which they shall be exercised rests in the absolute discretion of
the State. . . . The State, therefore, at its pleasure may modify or withdraw all such
powers, . . . expand or contract the territorial area, unite the whole or a part of it
with another municipality, [or] repeal the charter and destroy the corporation.‖
(Hunter v. Pittsburgh (1907) 207 U.S. 161, 178-179, quoted with approval in
Board of Supervisors, at p. 915.) The state (and, in particular, the Legislature) has
―plenary power to set the conditions under which its political subdivisions are
created‖ (Board of Supervisors, at p. 917); equally so, it has plenary power to set
the conditions under which its political subdivisions are abolished (Curtis v. Board
of Supervisors (1972) 7 Cal.3d 942, 951; Petition East Fruitvale Sanitary Dist.
(1910) 158 Cal. 453, 457).8

8       The Legislature has in the past lawfully exercised this authority by
dissolving municipal corporations formerly established under state law. (See, e.g.,
Stats. 1972, ch. 650, § 2, p. 1209 [disincorporating the Town of Hornitos].) As
                                                             (footnote continued on next page)

                                           22
        Redevelopment agencies are political subdivisions of the state and creatures
of the Legislature‘s exercise of its statutory power, the progeny of the Community
Redevelopment Law. (See § 33000 et seq.; 11 Miller & Starr, Cal. Real Estate
(3d ed. 2001) § 30B:2, p. 6 [―The redevelopment agency is solely a creature of
state statute, exercising powers delegated to it by the state legislature in matters of
state concern, and the scope of its authority is, therefore, defined and limited by
the Community Redevelopment Law . . . .‖].) Consistent with that nature, the
Legislature has in the past routinely narrowed and expanded redevelopment
agencies‘ various rights. (E.g., Stats. 1976, ch. 1337, p. 6061 et seq. [imposing
low income housing requirements]; Stats. 1993, ch. 942, p. 5334 et seq.
[Community Redevelopment Law Reform Act of 1993, enacting wide-ranging
reforms]; Stats. 2001, ch. 741 [amending redevelopment sunset provisions].) Most
significantly, the Legislature has mandated that redevelopment plans receiving tax
increment have finite durations. (§ 33333.2; Community Redevelopment Agency v.
County of Los Angeles (2001) 89 Cal.App.4th 719, 722.)
        The Association offers a twofold argument for why, notwithstanding the
legislative authority over redevelopment agencies historically inherent in the state
Constitution, the dissolution provisions of Assembly Bill 1X 26 are invalid. First,
the Association posits that Assembly Bill 1X 26 is inconsistent with article XVI,
section 16 of the state Constitution, governing tax increment revenue. Second, the

(footnote continued from previous page)

well, we have recognized the power to dissolve with respect to school districts:
―[T]he local-district system of school administration, though recognized by the
Constitution and deeply rooted in tradition, is not a constitutional mandate, but a
legislative choice. [Citation.] The Constitution has always vested ‗plenary‘ power
over education not in the districts, but in the State, through its Legislature, which
may create, dissolve, combine, modify, and regulate local districts at pleasure.‖
(Butt v. State of California, supra, 4 Cal.4th at p. 688.)

                                          23
Association argues that Proposition 22 (as approved by voters, Gen. Elec. (Nov. 2,
2010)) amended the state Constitution to effectively withdraw from the
Legislature the power to dissolve community redevelopment agencies for the
financial benefit of the state.
       What is now article XVI, section 16 was added by initiative in 1952,9
shortly after the Legislature enacted the Community Redevelopment Law.10 It
made express the Legislature‘s authority to authorize property tax increment
financing of redevelopment agencies and projects. However, nothing in its text
creates an absolute right to an allocation of property taxes. (See Cal. Const.,
art. XVI, § 16 [―The Legislature may provide that any redevelopment plan may
contain a provision‖ diverting tax increment to redevelopment agencies (italics
added)].)11 Nor does anything in the text of the section mandate that
redevelopment agencies, once created, must exist in perpetuity. On its face, the
provision is not self-executing and conveys no rights; rather, it authorizes the

9       It was originally adopted as article XIII, section 19 and, as part of a
constitutional restructuring, was subsequently moved without material change to
its present location.
10     A principal purpose of the proposed constitutional amendment was to
remove any doubt about the legality of the Community Redevelopment Law:
―All of the provisions of the Community Redevelopment Law, as amended in
1951, which relate to the use or pledge of taxes or portions thereof as herein
provided, or which, if effective, would carry out the provisions of this section or
any part thereof, are hereby approved, legalized, ratified and validated and made
fully and completely effective and operative upon the effective date of this
amendment.‖ (Cal. Const., art. XIII, former § 19, added by initiative, Gen. Elec.
(Nov. 4, 1952).)
11      In the same vein, article XVI, section 16 specifies that it does ―not affect
any other law or laws relating to the same or a similar subject but is intended to
authorize an alternative method of procedure governing the subject to which it
refers.‖ (Italics added.) In other words, it permits, but does not require, tax
increment financing as one new option for funding redevelopment.

                                          24
Legislature to enact statutes, and local governments to adopt redevelopment plans,
that are consistent with its scope.
       What is apparent from the constitutional provision‘s text is confirmed by its
history. The ballot materials provided to the voters gave no hint that the proposed
amendment was intended to make redevelopment agencies or tax increment
financing a permanent part of the government landscape. Rather, consistent with
the text‘s use of the permissive ―may,‖ the Legislative Counsel explained that the
proposed amendment was intended simply to ―authorize‖—but not require—the
Legislature to provide for tax increment financing for redevelopment. (Proposed
Amendments to Constitution: Propositions and Proposed Laws, Gen. Elec.
(Nov. 4, 1952) Legis. Counsel‘s analysis of Assem. Const. Amend. No. 55, p. 19.)
The arguments in favor of the proposed amendment similarly emphasized its
nonmandatory character: ―This constitutional amendment . . . is in effect an
enabling act to give the Legislature authority to enact legislation which will
provide for the handling of the proceeds of taxes levied upon property in a
redevelopment project. It is permissive in character and can become effective in
practice only by acts of the Legislature and the local governing body, the City
Council or Board of Supervisors. It will make possible the passage of laws
providing that tax revenues derived from any increase in the assessed value of
property within a redevelopment area because of new improvements, shall be
placed in a fund to defray all or part of the cost of the redevelopment project that
would otherwise have to be advanced from public funds.‖ (Id., argument in favor
of Assem. Const. Amend. No. 55, p. 20.)
       Against these indicia of intent, the Association emphasizes the final
sentence of article XVI, section 16: ―The Legislature shall enact those laws as
may be necessary to enforce the provisions of this section.‖ (Italics added.) The
word ―shall,‖ however, depending on the context in which it is used, is not

                                         25
necessarily mandatory. (People v. Lara (2010) 48 Cal.4th 216, 227; Nunn v. State
of California (1984) 35 Cal.3d 616, 625; see Garner‘s Dict. of Legal Usage (3d ed.
2011) pp. 952-953.) Moreover, consistent with its character as an ―enabling act‖
(Proposed Amendments to Constitution: Propositions and Proposed Laws, Gen.
Elec. (Nov. 4, 1952) argument in favor of Assem. Const. Amend. No. 55, p. 20),
the final sentence directs only passage of those laws ―as may be necessary.‖ This
portion of the text confirms the Legislature‘s authority to pass legislation it deems
necessary to carry out the ends of redevelopment, but imposes no obligation to
enact any particular law. It does not mandate that redevelopment agencies, or the
allocation of tax increment to them, be made permanent.
       The Association also looks to our decision in Marek v. Napa Community
Redevelopment Agency, supra, 46 Cal.3d 1070. There, we determined that
―indebtedness,‖ the term used to measure how much property tax increment
should be allocated to a redevelopment agency (see Cal. Const., art. XVI, § 16,
subd. (b); §§ 33670, 33675), should be interpreted broadly (Marek, at pp. 1081-
1086). We cautioned that neither article XVI, section 16 nor the Community
Redevelopment Law, as then written, contemplated that ―other tax entities [would]
share in tax increment revenues at any time before the agency‘s total indebtedness
has been paid or the amount in its ‗special fund‘ is sufficient to pay its total
indebtedness.‖ (Marek, at p. 1087.) The Association contends Assembly Bill
1X 26 is invalid because it fails to continue allocating tax increment for existing
indebtedness as broadly as in the past, most notably by allocating tax increment
for only some, but not all, obligations owed by redevelopment agencies to their
community sponsors. (See §§ 34171, subd. (d)(2), 34178, subd. (b).)12

12     As Matosantos noted at oral argument, the Legislature could well recognize
that because of the conjoined nature of the governing boards of redevelopment
                                                            (footnote continued on next page)

                                          26
        This argument misperceives both the role of article XVI, section 16 of the
state Constitution and the nature of the issue we resolved in Marek v. Napa
Community Redevelopment Agency, supra, 46 Cal.3d 1070. Article XVI, section
16 does not protect the receipt of tax increment funds up to the amount of a
redevelopment agency‘s total indebtedness, nor does it grant a constitutional right
to continue to receive tax increment for as long as redevelopment agencies have
debt; rather, it authorizes the Legislature to statutorily grant redevelopment
agencies rights to tax increment up to the amount of their total indebtedness.
As the Legislature may extend that authorization (and did, in the Community
Redevelopment Law), so it may limit or withdraw that authorization (as it has, in
Assem. Bill 1X 26) without violating article XVI, section 16. In Marek, we
addressed only the scope of the statutory term ―indebtedness‖ and the
corresponding scope of the constitutional authorization for redevelopment
agencies to be granted statutory rights to tax increment; that issue has no bearing
on the question we face here—whether article XVI, section 16 limits the
Legislature‘s power to dissolve existing redevelopment agencies in the midst of
ongoing projects. Marek thus is inapposite.
        Finally, the Association draws our attention to the first two sentences of an
uncodified section (§ 9) of Proposition 22, which, it contends, confirms that article
XVI, section 16 is a guarantee of tax increment funding and a protection against
dissolution. That section begins: ―Section 16 of Article XVI of the Constitution
requires that a specified portion of the taxes levied upon the taxable property in a
redevelopment project each year be allocated to the redevelopment agency to

(footnote continued from previous page)

agencies and their community sponsors, such obligations often were not the
product of arm‘s-length transactions.

                                          27
repay indebtedness incurred for the purpose of eliminating blight within the
redevelopment project area. Section 16 of Article XVI prohibits the Legislature
from reallocating some or that entire specified portion of the taxes to the State, an
agency of the State, or any other taxing jurisdiction, instead of to the
redevelopment agency.‖ (Prop. 22, Gen. Elec. (Nov. 2, 2010) § 9.) Whether or
not article XVI, section 16 originally required tax increment allocations to be
made to redevelopment agencies, rather than simply authorizing the Legislature to
pass legislation approving such allocations, the Association contends that after this
voter-approved statement, article XVI, section 16 must now be read to so provide.
       We reject this contention. The assertion in Proposition 22, section 9 that
tax increment allocations to redevelopment agencies are constitutionally
mandated, rather than constitutionally authorized and statutorily mandated, is a
clear misstatement of the law as it stood prior to the passage of Proposition 22.
Moreover, section 9 of Proposition 22 does not purport to amend article XVI,
section 16 or to change existing law concerning the source of redevelopment
agencies‘ entitlement, if any, to tax increment.13 Accordingly, we decline to treat
its immaterial misstatement of law as a basis for silently amending the state
Constitution.

13      The purpose of section 9, instead, is simply to explain that the Legislature
had been requiring the transfer of redevelopment agency tax increment, and that
Proposition 22 was intended to eliminate future transfers: ―The Legislature has
been illegally circumventing Section 16 of Article XVI in recent years by
requiring redevelopment agencies to transfer a portion of those taxes for purposes
other than the financing of redevelopment projects. A purpose of the amendments
made by this measure is to prohibit the Legislature from requiring, after the taxes
have been allocated to a redevelopment agency, the redevelopment agency to
transfer some or all of those taxes to the State, an agency of the State, or a
jurisdiction; or to use some or all of those taxes for the benefit of the State, an
agency of the State, or a jurisdiction.‖ (Prop. 22, Gen. Elec. (Nov. 2, 2010) § 9.)

                                          28
         The various ways in which the Association contends Assembly Bill 1X 26
is inconsistent with article XVI, section 16 of the state Constitution all flow from
the assumption that section 16 establishes for redevelopment agencies an absolute
right to continued existence. Because we can find no such right in the
constitutional provision, article XVI, section 16 does not invalidate Assembly Bill
1X 26.
         The Association‘s alternate constitutional argument rests on article XIII,
section 25.5, subdivision (a)(7) of the state Constitution, added in 2010 by
Proposition 22. Examining both the text and the various ballot arguments in
support of and against that initiative, we find nothing in them that would limit the
Legislature‘s plenary authority over the existence vel non of redevelopment
agencies.
         Article XIII, section 25.5, subdivision (a)(7)(A) of the state Constitution
generally prohibits the Legislature from requiring a redevelopment agency to pay
property taxes ―allocated to the agency pursuant to Section 16 of Article XVI to or
for the benefit of the State‖ or its agencies and jurisdictions,14 or otherwise
restricting or assigning such taxes for the state‘s benefit. The provision, the
Association reasons, both presumes and protects the existence of redevelopment
agencies. Dissolving redevelopment agencies would entail an impermissible
diversion of their tax increment to third parties, in contravention of section 25.5,
subdivision (a)(7)(A). Moreover, if the state cannot assign tax increment to third
parties, that increment must go to redevelopment agencies; hence, redevelopment
agencies must be entitled to exist to receive it.

14      ―Jurisdiction‖ as used here includes both special districts and school
districts. (See Cal. Const., art. XIII, § 25.5, subd. (b)(3); Rev. & Tax. Code, § 95,
subds. (a), (b).)

                                           29
       This argument suffers from a surface implausibility. The
constitutionalization of a political subdivision—the alteration of a local
government entity from a statutory creation existing only at the pleasure of the
sovereign state to a constitutional creation with life and powers of independent
origin and standing—would represent a profound change in the structure of state
government. Municipal corporations, though of far more ancient standing than
redevelopment agencies, have never achieved such status. (See Cal. Const.,
art. XI, § 2, subd. (a) [specifying the Legislature‘s authority over city formation
and powers].) Proposition 22 contains no express language constitutionalizing
redevelopment agencies. (Cf. Cal. Const., art. XXXV, § 1, added by initiative,
Gen. Elec. (Nov. 2, 2004) [creating the Cal. Institute for Regenerative Medicine as
a constitutional entity]; id., art. XXI, § 2, added by initiative, Gen. Elec. (Nov. 4,
2008) [creating the Citizens Redistricting Com. as a constitutional entity].) It
would be unusual in the extreme for the people, exercising legislative power by
way of initiative, to adopt such a fundamental change only by way of implication,
in an initiative facially dealing with purely fiscal matters, in a corner of the state
Constitution addressing taxation. As the United States Supreme Court has put it,
the drafters of legislation ―do[] not, one might say, hide elephants in mouseholes.‖
(Whitman v. American Trucking Assns., Inc. (2001) 531 U.S. 457, 468.)
       The principle of inclusio unius est exclusio alterius applies here.
Proposition 22 expressly adds numerous limits to the Legislature‘s statutory
powers (Prop. 22, Gen. Elec. (Nov. 2, 2010) §§ 3-5, 5.3, 6-6.1, 7), and in one
instance withdraws from the Legislature a preexisting constitutional power (id.,
§ 5.6 [repealing Cal. Const., art. XIX, former § 6]), but makes no mention of any
intent to divest the Legislature of the power to dissolve redevelopment agencies.
If the initiative proponents and voters had intended to strip the Legislature of that

                                           30
power or to alter the Legislature‘s article XVI, section 16 permissive authority, it
stands to reason they would have said so expressly.
       Had the voters in fact intended to amend the Constitution to fundamentally
alter the relationship between the state and this class of political subdivision, we
would, moreover, expect to find at least a single mention of such an intention in
the various supporting and opposing ballot arguments. Instead, we find silence.
The Legislative Analyst‘s review of the initiative identifies no such anticipated
effect. (Voter Information Guide, Gen. Elec. (Nov. 2, 2010) pp. 30-35.) Indeed,
the ballot argument in favor of Proposition 22 and the rebuttal to the argument
against it do not even mention redevelopment. (Voter Information Guide, at
pp. 36-37.) Only the opposing arguments highlight redevelopment and then only
to criticize the initiative for how it secretly channels tax dollars to redevelopment
agencies. (Ibid.)
       The Association suggests it is not asserting an absolute right to perpetual
existence, only a right for some form of agency to exist to receive redevelopment
funds for as long as there is an active redevelopment plan and indebtedness. This
framing does not change the analysis or conclusions. It would mean the
Legislature‘s power to dissolve vanished as soon as a redevelopment agency was
created; thereafter, an agency or its similarly tasked successor effectively could
expire only of natural causes, after every project it might undertake in its
jurisdiction had been completed and paid off. No hint of such a right is disclosed
in the text or history of either article XVI, section 16 or article XIII, section 25.5,
subdivision (a)(7) of the state Constitution.
       Contrary to the Association‘s contention, declining to imply into article
XIII, section 25.5, subdivision (a)(7) a constitutional guarantee of continued
existence for redevelopment agencies does not render the subdivision a nullity.
Though the Legislature retains the broad power to dissolve redevelopment

                                           31
agencies, Proposition 22 strips it of the narrower power to insist on transfers to
third parties of property tax revenue already allocated to redevelopment agencies,
as it had done on numerous previous occasions. (See §§ 33680, 33681.7 to
33681.15, 33685 to 33692; former § 33681 (Stats. 1992, ch. 700, § 1.5, pp. 3115-
3116); former § 33681.5 (Stats. 1993, ch. 68, § 4, pp. 942-944).) It is precisely
such ―raids‖ the text of Proposition 22 and the arguments in support of it
denounce. (Voter Information Guide, Gen. Elec. (Nov. 2, 2010) p. 36; see
Prop. 22, Gen. Elec. (Nov. 2, 2010) §§ 2, subds. (e), (g), 2.5, 9.) The protection so
granted is not insignificant simply because it is conditioned on redevelopment
agencies‘ existing and having property tax increment allocated to them.
       Accordingly, we discern no constitutional impediment to the Legislature‘s
electing to dissolve the state‘s redevelopment agencies under part 1.85 of division
24 of the Health and Safety Code.

              2. Freezing Redevelopment Agency Transactions Under Part 1.8 of
                 Division 24 of the Health and Safety Code
       As a means of facilitating dissolution under division 24, part 1.85, the
Legislature in division 24, part 1.8 has suspended redevelopment agencies‘ ability
to make free use of their funds. (See, e.g., §§ 34161 [prohibiting new or expanded
debts except as provided in pt. 1.8], 34162 [limiting new indebtedness], 34167,
subd. (a) [―provisions of this part shall be construed as broadly as possible to . . .
restrict the expenditure of funds to the fullest extent possible‖].) The purpose of
these restrictions is ―to preserve, to the maximum extent possible, the revenues
and assets of redevelopment agencies so that those assets and revenues that are not
needed to pay for enforceable obligations may be used by local governments to
fund core governmental services including police and fire protection services and
schools.‖ (§ 34167, subd. (a); see also Assem. Bill 1X 26, § 1, subd. (j)(1) [the
intent of pt. 1.8 is to bar new obligations pending dissolution].) The Association

                                          32
contends these limits violate article XIII, section 25.5, subdivision (a)(7)(B) of the
state Constitution, prohibiting restrictions on the use of property taxes allocated to
redevelopment agencies for the benefit of the state or its agencies.15 We conclude
this portion of Assembly Bill 1X 26 is valid as well.
       The power to abolish an entity necessarily encompasses the incidental
power to declare its ending point.16 If Proposition 22, as we have concluded, was
not intended to strip the Legislature of the power to terminate redevelopment
agencies, then it could not have been intended to deprive the Legislature of the
ability to decide when redevelopment agencies could cease to exist as legal entities
or at what point, as part of winding up and dissolving, they would be relieved of
the ability to make new binding commitments and engage in new business. As a
practical and perhaps constitutional matter, to require an existing entity that has
entered into a web of current contractual and other obligations to dissolve
instantaneously is not possible; doing so would inevitably raise serious impairment
of contract questions. (See U.S. Const., art. I, § 10; Cal. Const., art. I, § 9.)
       As Matosantos argues, and we agree, Proposition 22‘s limit on state
restrictions of redevelopment agencies‘ use of their funds is best read as limiting
the Legislature‘s powers during the operation, rather than the dissolution, of
redevelopment agencies. Article XIII, section 25.5, subdivision (a)(7)(B)
prohibits, with minor exceptions, further legislative restrictions on the use of

15       California Constitution, article XIII, section 25.5, subdivision (a)(7)
prohibits the Legislature from ―[r]equir[ing] a community redevelopment agency
. . . (B) to use, restrict, or assign a particular purpose for such taxes for the benefit
of the State, any agency of the State, or any jurisdiction,‖ with exceptions not
applicable here.
16      The Legislature has already wielded an analogous power by imposing time
limits on the life spans of agencies‘ redevelopment plans. (§ 33333.2.)

                                           33
property taxes allocated to redevelopment agencies under article XVI, section 16.
Article XVI, section 16, in turn, creates no absolute right to an allocation of
property taxes. (See Cal. Const., art. XVI, § 16 [―The Legislature may provide
that any redevelopment plan may contain a provision‖ diverting tax increment to
redevelopment agencies (italics added)].) Thus, if the Legislature exercises its
constitutional power to authorize allocation of property taxes to redevelopment
agencies, and if a redevelopment plan so provides, then those taxes so allocated to
an operating redevelopment agency may not be restricted to benefit the state by
further legislative action.
       The Legislature in fact exercised that constitutional power when adopting
and subsequently amending the Community Redevelopment Law (see §§ 33670,
33675), but the right of redevelopment agencies to tax increment funding thereby
created was statutory, not constitutional. In turn, Assembly Bill 1X 26 revises
those statutory rights. The Legislature has determined that tax increment should
no longer be allocated to redevelopment agencies (Assem. Bill 1X 26, § 1, subd.
(i) [upon agencies‘ dissolution, property taxes are no longer to be deemed tax
increment and allocated to redevelopment agencies]), except insofar as necessary
to satisfy existing obligations. The measure exercises the Legislature‘s
constitutional power to authorize property tax increment revenue for, or to
withdraw that authorization from, redevelopment agencies. (See Cal. Const.,
art. XVI, § 16.) As such, the measure modifies the constitutional predicate for the
operation of article XIII, section 25.5, subdivision (a)(7)(B) of the state
Constitution. In the absence of property tax increment allocated under article
XVI, the latter subdivision has no force or effect.
       Redevelopment agencies, moreover, have a conditional right to the
allocation of tax increment only to the extent of any existing indebtedness.
(§§ 33670, 33675; Cal. Const., art. XVI, § 16, subd. (b); cf. Marek v. Napa

                                          34
Community Redevelopment Agency, supra, 46 Cal.3d at p. 1082 [interpreting
―indebtedness‖ to include all existing obligations, including executory ones].)
They have no particular right to incur additional future indebtedness. The
provisions of part 1.8 of division 24 the Health and Safety Code, which respect the
need to satisfy existing indebtedness (see § 34167) while precluding the creation
of additional indebtedness (§§ 34162-34163), invade no rights protected by article
XIII, section 25.5, subdivision (a)(7)(B) of the state Constitution.
       Accordingly, we conclude Proposition 22 does not invalidate the freeze
portions of Assembly Bill 1X 26 as they apply to dissolving redevelopment
agencies.17

       C. The Constitutionality of Assembly Bill 1X 27
       We turn to Assembly Bill 1X 27. The measure conditions the future
operation of redevelopment agencies on continuation payments. (§§ 34193,
subd. (a), 34193.2, subd. (a).) Analyzing its operation in light of the constitutional
limitations adopted by Proposition 22, we conclude the condition the measure
imposes is unconstitutional and Assembly Bill 1X 27 is, accordingly, facially
invalid.
       The Legislature may not ―[r]equire a community redevelopment agency
(A) to pay, remit, loan, or otherwise transfer, directly or indirectly, taxes on ad
valorem real property and tangible personal property allocated to the agency
pursuant to Section 16 of Article XVI to or for the benefit of the State, any agency
of the State, or any jurisdiction . . . .‖ (Cal. Const., art. XIII, § 25.5, subd. (a)(7),

17     We need not consider any constitutional objections to the freeze portions as
they apply to redevelopment agencies whose community sponsors avail
themselves of the provisions of Assembly Bill 1X 27 to continue operations
because, as discussed below, we conclude Assembly Bill 1X 27 is invalid.

                                            35
added by Prop. 22, Gen. Elec. (Nov. 2, 2010).) That the continuation payments
called for by Assembly Bill 1X 27 will benefit the state and its jurisdictions, i.e.,
special districts and school districts, is uncontested; for fiscal year 2011-2012,
they replace funding the state otherwise would have to supply under Proposition
98 (see § 34194.1, subd. (b)), and in this and future years they go to funds
supporting school districts and special districts (§§ 34194, subd. (a), 34194.1,
subd. (e), 34194.4).
       Moreover, as we shall explain, Assembly Bill 1X 27‘s continuation
payments involve the ―direct[] or indirect[]‖ payment, remittance, loan, or transfer
of tax increment allocated to community redevelopment agencies. (Cal. Const.,
art. XIII, § 25.5, subd. (a)(7).) In interpreting the scope of that constitutional
provision, added by initiative, we ― ‗apply the same principles that govern
statutory construction,‘ ‖ beginning with the text as the best indicator of intent.
(Professional Engineers in California Government v. Kempton (2007) 40 Cal.4th
1016, 1037.) Where the text is ambiguous we must turn to extrinsic sources, such
as the context of adoption and the ballot materials presented to the voters. (Ibid.)
Here, the text of article XIII, section 25.5, subdivision (a)(7) does not define
clearly the intended scope of its prohibition against requiring ―direct[] or
indirect[]‖ payment, transfer, etc. of tax revenue. Presented with an ambiguity, we
examine the historical backdrop against which the provision was drafted and
adopted to discern its meaning.
       In the two decades preceding passage of Proposition 22, redevelopment
agencies were the subject of repeated ERAF shifts—directives to transfer money
to county ERAF‘s. Each ERAF shift calculated the amount every redevelopment
agency owed as a fraction of the tax increment it received. (§§ 33681.7, subd.
(a)(2), 33681.9, subd. (a)(2), 33681.12, subd. (a)(2), 33685, subd. (a)(2), 33690,
subd. (a)(2), 33690.5, subd. (a)(2); former § 33681, subd. (a)(2) (Stats. 1992,

                                          36
ch. 700, § 1.5, p. 3115); former § 33681.5, subd. (a)(2) (Stats. 1993, ch. 68, § 4,
pp. 942-943).) Notably, however, the shifts did not require payments to come
specifically from tax increment; rather, they provided, in language the Legislature
copied from year to year: ―To make the allocation required by this section, an
agency may use any funds that are legally available and not legally obligated for
other uses, including, but not limited to, reserve funds, proceeds of land sales,
proceeds of bonds or other indebtedness, lease revenues, interest, and other earned
income.‖ (§ 33690.5, subd. (b), italics added [2010-2011 ERAF legislation];
accord, §§ 33681.7, subd. (c), 33681.9, subd. (c), 33681.12, subd. (c), 33685,
subd. (c), 33690, subd. (b) [same language in 2002-2003, 2003-2004, 2004-2005,
2008-2009, and 2009-2010 ERAF legislation]; former § 33681, subd. (c) (Stats.
1992, ch. 700, § 1.5, p. 3116) [same language in 1992-1993 ERAF legislation];
former § 33681.5, subd. (c) (Stats. 1993, ch. 68, § 4, p. 943) [same language in
1993-1994 and 1994-1995 ERAF legislation]; see Los Angeles Unified School
Dist. v. County of Los Angeles, supra, 181 Cal.App.4th at p. 421 & fn. 3.) Thus,
although ERAF remittances were calculated as a portion of redevelopment agency
tax increment, the Legislature was not particular about the source of funds actually
used to make the payments.
       Nor was the Legislature concerned with whether it was the redevelopment
agencies or their community sponsors that actually made the payments. Beginning
with the fiscal year 2003-2004 ERAF legislation, the Legislature included in each
annual measure a provision allowing city councils and county boards of
supervisors to agree to make the payments on behalf of their redevelopment
agencies. (§§ 33681.11, subd. (a), 33681.14, subd. (a), 33687, subd. (a), 33692,
subds. (a), (b); see, e.g., Sen. Budget & Fiscal Revenue Com., 3d reading analysis
of Sen. Bill No. 1045 (2003-2004 Reg. Sess.) as amended July 29, 2003, p. 1 [the
ERAF legislation ―[a]llows any sponsor city or county to pay their RDA‘s ERAF

                                         37
contribution in lieu of [the] RDA‖].) Here, too, the Legislature did not specify the
source of the funds to be used; a legislative body could apply ―any funds that are
legally available for this purpose.‖ (§§ 33681.11, subd. (b), 33681.14, subd. (b),
33687, subd. (b), 33692, subd. (c); see, e.g., Sen. Budget & Fiscal Revenue Com.,
3d reading analysis of Sen. Bill No. 1045 (2003-2004 Reg. Sess.) as amended
July 29, 2003, pp. 1-2.)
       As enacted in the years preceding Proposition 22, then, state ERAF
legislation had at least two consistent and defining features: (1) each payment was
calculated in proportion to the amount of net and gross tax increment received by a
redevelopment agency, operating in effect as a levy on the receipt of tax increment
funds, and (2) the legislation was indifferent as to the actual source of payment, be
it from the tax increment itself, other assets a redevelopment agency might have,
or any available funds a community sponsor might have.
       This indifference made a certain practical sense. Redevelopment agencies
and their community sponsors are conjoined to the extent that, in virtually all
instances, the same individuals constitute both the redevelopment agency
governing board and the city council or county board of supervisors that created
the agency. The Legislature had no particular reason to care where ERAF
payments might come from, and no reason to preclude local governments and
redevelopment agencies from deciding in a given year whether the agency or its
community sponsor might be better positioned to make payment.
       This, then, was the historical context in which the backers of Proposition 22
drafted article XIII, section 25.5, subdivision (a)(7) of the state Constitution.
Proposition 1A‘s passage in 2004 curtailed ERAF shifts aimed at cities and
counties, but redevelopment agencies remained subject to them. Consequently,
Proposition 22 was drafted with the specific intent of ending further ERAF shifts
of the sort previously imposed on the agencies, and restricting the state‘s ability to

                                          38
demand back, for schools or other state purposes, a percentage of the money
county auditors allocated to redevelopment agencies. Section 2 of Proposition 22
identified among the past practices targeted by the initiative‘s constitutional
amendments ERAF shifts from redevelopment agencies to schools. (Prop. 22, § 2,
subd. (d)(3); see also Voter Information Guide, Gen. Elec. (Nov. 2, 2010) Legis.
Analyst‘s analysis of Prop. 22, p. 33.) Section 2.5 of the initiative declared the
intent to end such shifts. (Prop. 22, §§ 2, subd. (g), 2.5; see also id., § 9; Voter
Information Guide, Gen. Elec. (Nov. 2, 2010) Legis. Analyst‘s analysis of
Prop. 22, p. 34 [―Reduces State Authority. This measure prohibits the state from
enacting new laws that require redevelopment agencies to shift funds to schools or
other agencies.‖].)
       The text of Proposition 22 mandates that ―[t]he provisions of this act shall
be liberally construed in order to effectuate its purposes.‖ (Prop. 22, § 11.)
Accordingly, we must interpret article XIII, section 25.5, subdivision (a)(7) of the
state Constitution in light of the declared intent to end further shifts. Clearly the
drafters meant the provision to be at least broad enough to foreclose ERAF
legislation of the sort previously enacted, or else the new constitutional protection
would amount to an empty gesture, as the Legislature could continue to enact the
same legislation. As the voters were explicitly apprised of this intent in both the
Legislative Analyst‘s analysis of the initiative and in the initiative text, they can be
regarded as having approved a constitutional prohibition against ERAF shifts like
those enacted before 2010.
       Given the directive that we adopt a liberal construction as necessary to
ensure the purposes of Proposition 22 are carried out, it follows that the
constitutional prohibition against ―directly or indirectly‖ requiring transfers of tax
increment (Cal. Const., art. XIII, § 25.5, subd. (a)(7)) must extend to legislation
that imposes a levy on the receipt of tax increment funds, even if the legislation

                                          39
does not specify that payment must come directly from the redevelopment agency
or from its tax increment funds. The prohibition against even ―indirect[]‖ transfers
must reasonably be read to extend to legislation that, like the ERAF shifts
Proposition 22 was intended to prohibit, gives redevelopment agencies and their
community sponsors latitude to decide the source of any payment.
       Assembly Bill 1X 27 is such legislation. Like all prior ERAF legislation, it
operates as a levy on the receipt of tax increment funds. That is, for each dollar a
redevelopment agency receives, a set percentage must be paid back into ERAF‘s.
(See § 34194 [calculating continuation payment as a fraction of the net and gross
tax increment each redevelopment agency receives].) In 2011-2012, the levy rate
is roughly 34 percent ($1.7 billion out of $5 billion in tax increment); in future
years, it is substantially lower ($400 million out of $5 billion equates to 8 percent).
       That Assembly Bill 1X 27 allows payment to come either from community
sponsors (§ 34194.1, subd. (a)), or from redevelopment agencies pursuant to
reimbursement agreements (§ 34194.2), does not distinguish it from past ERAF
legislation. Nor does the leeway Assembly Bill 1X 27 grants redevelopment
agencies and community sponsors to decide the source from which to make
payments diminish the payments‘ character as a levy on tax increment funds.
Reasoning by analogy, income tax is income tax, even if a taxpayer may pay the
government out of nonincome assets rather than directly return a portion of his or
her income; so too, section 34194 is a levy on the receipt of tax increment for the
benefit of the state‘s subdivisions, whether the levy is paid directly out of the tax
increment the redevelopment agency receives, or indirectly out of other assets it or
its community sponsor may possess. The source of payment is a distinction
without a difference in light of the Legislature‘s historic indifference to ERAF

                                          40
payment sources and Proposition 22‘s broad prohibition on even ―direct[] or
indirect[]‖ transfers.18
       As construed by the dissent, however, Proposition 22 would prohibit only
funding schemes the Legislature has not employed for nearly a decade, while
permitting the very schemes its adoption history plainly demonstrates the initiative
was intended to prohibit. The dissent identifies as the saving grace of Assembly
Bill 1X 27 the provision allowing community sponsors to make continuation
payments. (Conc. & dis. opn., post, at p. 15; see § 34194.1.) But every ERAF
scheme since 2003 has included that feature. (Ante, at p. 37).19 Consequently,
every such ERAF scheme would, under the dissent‘s construction, remain valid in
its entirety even after Proposition 22,20 and the Legislature could simply have

18     In light of this conclusion, we need not consider the Association‘s alternate
arguments that other provisions of the state Constitution also broadly constrain the
Legislature‘s ability to direct the reallocation of community sponsor funds. (See
Cal. Const., art. XIII, §§ 24, subd. (b), 25.5, subd. (a)(1), (3); id., art. XIII B, § 6,
subd. (b)(3).)
19     The Legislature last passed ERAF legislation without such a ―community
sponsor pays‖ option in 2002. (Stats. 2002, ch. 1127, §§ 15-16; see also Stats.
1992, chs. 699, 700, pp. 3081-3125; Stats. 1993, ch. 68, pp. 939-955.)
20     The dissent implies that under its interpretation Proposition 22 would still
materially constrain the Legislature in crafting ERAF legislation. Not so.
Because under that interpretation a ―sponsor pays‖ option is not prohibited by
Proposition 22, no part of any ERAF funding scheme that includes such a
provision is invalid. That is, so long as the Legislature includes in its funding
scheme one nonprohibited option for payment, all other payment alternatives
become optional, and thus lawful. Proposition 22, under that view, would do
nothing to prohibit passage of any of the statutes identified by the dissent as
potentially invalid (conc. & dis. opn., post, at pp. 11-14) so long as they were
accompanied by a ―sponsor pays‖ statute like section 33692.

                                           41
reenacted without change 2009‘s scheme.21 Such an interpretation cannot be
squared with the available evidence of the drafters‘ and voters‘ intent, which was
to prohibit these modern raids. (See Voter Information Guide, Gen. Elec. (Nov. 2,
2010) Legis. Analyst‘s analysis of Prop. 22, pp. 33-34 [singling out recent ERAF
shifts as the sort of raid on tax increment Prop. 22 was intended to foreclose];
Prop. 22, §§ 2, subd. (d)(3), 2.5, 9 [same].)
       The dissent justifies this rejection of expressed intent by relying on the
grammar and syntax of Proposition 22. (Conc. & dis. opn., post, at pp. 15-16.)
However, ―[t]he rules of grammar and canons of construction are but tools,
‗guides to help courts determine likely legislative intent. [Citations.] And that
intent is critical. Those who write statutes seek to solve human problems. Fidelity
to their aims requires us to approach an interpretive problem not as if it were a
purely logical game, like a Rubik‘s Cube, but as an effort to divine the human
intent that underlies the statute.‘ ‖ (Burris v. Superior Court (2005) 34 Cal.4th
1012, 1017-1018.) Grammar and syntax thus are a means of gleaning intent, not a
basis for preventing its effectuation. Where, as here, ballot materials clearly
demonstrate the drafters‘ and voters‘ intent, syntax is not dispositive.
       Moreover, nothing in the grammar of article XIII, section 25.5, subdivision
(a)(7) of the state Constitution precludes giving the provision its intended effect.
A required ―indirect[]‖ transfer of tax increment by a redevelopment agency may
include circumstances where the redevelopment agency, governed by the same
people as its community sponsor (see ante, p. 9 & fn. 5), must persuade that

21     That the Legislature did not, and instead believed it needed to add the
purported option of dissolution to render its scheme constitutional, suggests the
Legislature read Proposition 22 just as we do on this point.

                                          42
sponsor to pay, with or without reimbursement, a specified percentage of the tax
increment the agency receives as the price for that receipt.
       In her briefing, Matosantos does not focus on whether Assembly Bill 1X 27
involves ―direct[] or indirect[]‖ payments of tax increment funds, but instead on
the argument that Assembly Bill 1X 27 does not ―[r]equire‖ payment within the
meaning of article XIII, section 25.5, subdivision (a)(7).22 She acknowledges that
Proposition 22 forbids the Legislature from directly requiring payment to special
districts and school districts on the state‘s behalf. She contends, however, that the
payments provided for under Assembly Bill 1X 27 are not required but are
voluntary and constitutional, because the measure affords local governments an
option between payment and dissolution.
       This is indeed the way in which Assembly Bill 1X 27 is most distinct from
the past ERAF legislation Proposition 22 specifically targeted. Effectively,
however, the difference is only a change in the sanction for nonpayment. Before,
nonpayment resulted in a range of limitations on a redevelopment agency‘s
operations (see, e.g., §§ 33686, subd. (e), 33691, subd. (e)); now, it will result in
dissolution (§ 34195).
       This is another distinction without a difference. Assembly Bill 1X 27 on its
face imposes not an optional condition but an absolute requirement: going
forward, every redevelopment agency must have its community sponsor annually
pay the portion of its tax increment assessed by the state under Assembly Bill

22     Similarly, when asked at oral argument whether ―were [payment] not
voluntary,‖ the various constitutional provisions relied on by the Association
―would cover the community sponsor funds‖ and shield them from the state‘s
reach, Matosantos‘s counsel replied, ―I think that‘s right,‖ but went on to defend
Assembly Bill 1X 27 as giving community sponsors a choice whether or not to
pay.

                                          43
1X 27. Cities and counties operating redevelopment agencies, whether agencies
that existed before Assembly Bill 1X 27 or agencies they establish for the first
time to address new blight, must pay without exception in this and every future
year. (See §§ 34194, 34195.) A condition that must be satisfied in order for any
redevelopment agency to operate is not an option but a requirement.23 Such
absolute requirements Proposition 22 forbids. (See Cal. Const., art. XIII, § 25.5,
subd. (a)(7)(A).)
       The Association argues that this conclusion is sufficient to invalidate not
only Assembly Bill 1X 27, but also the dissolution provisions of Assembly Bill
1X 26. Not necessarily. How broadly the taint of the invalid exercise of
legislative power extends is a question of severability. (See, e.g., Sonoma County
Organization of Public Employees v. County of Sonoma (1979) 23 Cal.3d 296,
319-320 [preserving the state‘s bailout of local governments notwithstanding an
unconstitutional condition placed on that bailout because the one could be severed
from the other].) Accordingly, we turn to an analysis of severability and the
impact of the invalid continuation payment program (Assem. Bill 1X 27, § 2;
Health & Saf. Code, div. 24, pt. 1.9) on the remaining provisions of Assembly Bill
1X 27 and on Assembly Bill 1X 26.

       D. Severability
       We conclude Assembly Bill 1X 27 is invalid in its entirety, while Assembly
Bill 1X 26 may be severed and enforced independently.

23    Whether to establish a redevelopment agency is voluntary, but that has
always been the case. Now, however, if a city or county does establish a
redevelopment agency, the agency must through its community sponsor make the
payments required under Assembly Bill 1X 27.

                                         44
        In determining whether the invalid portions of a statute can be severed, we
look first to any severability clause. The presence of such a clause establishes a
presumption in favor of severance. (Santa Barbara Sch. Dist. v. Superior Court
(1975) 13 Cal.3d 315, 331 [― ‗Although not conclusive, a severability clause
normally calls for sustaining the valid part of the enactment . . . .‘ ‖].) We will,
however, consider three additional criteria: ―[T]he invalid provision must be
grammatically, functionally, and volitionally separable.‖ (Calfarm Ins. Co. v.
Deukmejian (1989) 48 Cal.3d 805, 821.) Grammatical separability, also known as
mechanical separability, depends on whether the invalid parts ―can be removed as
a whole without affecting the wording‖ or coherence of what remains. (Id. at
p. 822; see also Santa Barbara, at pp. 330-331.) Functional separability depends
on whether ―the remainder of the statute ‗ ―is complete in itself . . . .‖ ‘ ‖ (Sonoma
County Organization of Public Employees v. County of Sonoma, supra, 23 Cal.3d
at p. 320.) Volitional separability depends on whether the remainder ― ‗would
have been adopted by the legislative body had the latter foreseen the partial
invalidation of the statute.‘ ‖ (Santa Barbara, at p. 331; accord, Gerken v. Fair
Political Practices Com. (1993) 6 Cal.4th 707, 714.)
        With respect to the portions of Assembly Bill 1X 27 apart from the
section 2 continuation payment program, the Legislature in section 5 included a
nonseverability clause: ―If Section 2 of this act, or the application thereof, is held
invalid in a court of competent jurisdiction, the remaining provisions of this act are
not severable and shall not be given, or otherwise have, any force or effect.‖
(Assem. Bill 1X 27, § 5.) Such a clause conclusively negates the possibility of
volitional separability: the Legislature would not have enacted the rest of
Assembly Bill 1X 27 without the invalid section 2. Accordingly, the remaining
provisions of Assembly Bill 1X 27 cannot be severed and are unenforceable as
well.

                                          45
       In direct contrast, the Legislature in section 4 of Assembly Bill 1X 27
expressed in a severability clause its intent to preserve Assembly Bill 1X 26: ―The
provisions of Section 2 of this act [Assem. Bill 1X 27] are distinct and severable
from the provisions of Part 1.8 (commencing with [Section] 34161) and Part 1.85
(commencing with Section 34170) of Division 24 of the Health and Safety Code
[enacted by Assem. Bill 1X 26] and those provisions shall continue in effect if any
of the provisions of this act are held invalid.‖ (Assem. Bill 1X 27, § 4.)
Grammatically and mechanically, Assembly Bill 1X 26 can be separated from
Assembly Bill 1X 27: it was passed as a distinct measure and is codified in a
different portion of the Health and Safety Code. Functionally as well, it is
separate: the freeze (pt. 1.8) and dissolution (pt. 1.85) procedures can be
implemented whether or not the continuation payment program (pt. 1.9) is valid.
(Indeed, invalidating pt. 1.9 alone would produce a result no different than if each
redevelopment agency and sponsoring local government entity had elected not to
make payments and had instead chosen to dissolve.)
       The Association concedes grammatical separability but contends Assembly
Bills 1X 26 and 1X 27 are neither functionally nor volitionally separable. As to
functional separability, the Association posits that the Legislature likely expected
Assembly Bill 1X 27 to be upheld and Assembly Bill 1X 26 thus to come into play
only for those redevelopment agencies that elected to dissolve. Speculation as to
what the Legislature may have expected is immaterial here; the issue under this
prong is simply whether Assembly Bill 1X 26 is complete in itself such that it can
be enforced notwithstanding Assembly Bill 1X 27‘s invalidity. Assembly Bill
1X 26 outlines an independent mechanism for redevelopment agency dissolution
that does not depend in any way on Assembly Bill 1X 27.
       Alternatively, the Association identifies a small handful of provisions in
Assembly Bill 1X 26 that are meaningful only if Assembly Bill 1X 27 is valid.

                                         46
(See §§ 34172, subd. (a)(2) [permitting communities to create new redevelopment
agencies provided they make Assem. Bill 1X 27 continuation payments], 34178.7,
34188.8, 34191, subd. (a) [governing redevelopment agencies that fail to keep up
with continuation payments].) The provision allowing communities to establish
new redevelopment agencies subject to continuation payments under Assembly
Bill 1X 27 is invalid for precisely the same reasons applicable generally to
Assembly Bill 1X 27. Its invalidity does not, however, affect the rest of Assembly
Bill 1X 26, as the provision is grammatically, functionally, and volitionally
separable from the rest of Assembly Bill 1X 26. (See Assem. Bill 1X 26, § 12
[providing for internal severability for Assem. Bill 1X 26].) Those provisions
applicable only to redevelopment agencies that start but then cease continuation
payments are not invalid, but are simply irrelevant; in light of Assembly Bill
1X 27‘s invalidity, no redevelopment agency will ever become subject to them.
Neither set of provisions impairs Assembly Bill 1X 26‘s functional separability.
       As for volitional separability, the Association points to evidence that the
Legislature rejected Governor Brown‘s proposal simply to end redevelopment
agencies in favor of the two-bill package it ultimately passed. The Association
further quotes statements from various individual legislators during the June 15,
2011, floor debates suggesting they (1) viewed Assembly Bills 1X 26 and 1X 27
as a package deal (remarks of Sen. Steinberg; remarks of Assemblyman
Blumenfield) and (2) preferred to mend redevelopment rather than end it (remarks
of Sen. Hancock).
       We may accept that the Legislature treated Assembly Bills 1X 26 and
1X 27 as a package, and accept as self-evident that the Legislature preferred
dissolution with an option to buy a reprieve over dissolution without any such
option; after all, it passed Assembly Bill 1X 27 in addition to Assembly Bill
1X 26, when it could have opted for some variation of Governor Brown‘s outright

                                         47
dissolution proposal. We need not further consider what weight, if any, to accord
the statements of individual legislators because this evidence goes to answering
the wrong question. The issue, when assessing volitional separability, is not
whether a legislative body would have preferred the whole to the part; surely it
would have, and the legislative history the Association points to tells us no more
than that. Instead, the issue is whether a legislative body, knowing that only part
of its enactment would be valid, would have preferred that part to nothing, or
would instead have declined to enact the valid without the invalid. (See, e.g.,
Gerken v. Fair Political Practices Com., supra, 6 Cal.4th at p. 719; Calfarm Ins.
Co. v. Deukmejian, supra, 48 Cal.3d at p. 822; Sonoma County Organization of
Public Employees v. County of Sonoma, supra, 23 Cal.3d at p. 320.)
       As to that question, the interstatutory severability clause the Legislature
enacted is conclusive. (See Assem. Bill 1X 27, § 4.) It is no generic severability
clause, providing nonspecifically that if any provision of a measure is invalidated
the remaining portions of an act should remain in force. (Cf. § 34168, subd. (b).)
Rather, it deals with the precise severability question we face: whether, if
section 2 of Assembly Bill 1X 27 were to be invalidated, the Legislature would
have wanted the provisions of Assembly Bill 1X 26 to remain in force. The
interstatutory severability clause answers that question unequivocally in the
affirmative: Assembly Bill 1X 27, section 2 is severable from Assembly Bill
1X 26, and the Legislature intended the freeze and dissolution provisions to
continue in effect notwithstanding the invalidation of the continuation payment
program. (Assem. Bill 1X 27, § 4; see also Assem. Budget Com., Conc. in Sen.
Amend., analysis of Assem. Bill 1X 27 (2011-2012 1st Ex. Sess.) as amended
June 14, 2011, p. 4 [highlighting that while most provisions of Assem. Bill 1X 27
were not severable, the bill was severable from ―[Assem. Bill 1X 26], which
eliminates redevelopment. Thus, if provisions of this bill are found invalid, the

                                         48
provisions of the first bill could remain in effect.‖]; Sen. Rules Com., Off. of Sen.
Floor Analyses, 3d reading analysis of Assem. Bill 1X 27 (2011-2012 1st Ex.
Sess.) as amended June 15, 2011, p. 6 [same].)24 Accordingly, whatever
individual legislators may have said at one point or another, what the Legislature
actually did establishes it would have passed Assembly Bill 1X 26 irrespective of
the passage of Assembly Bill 1X 27, and that Assembly Bill 1X 26 is volitionally
separable. Consequently, it is severable.
       We summarize our conclusions concerning the constitutional landscape.
The Legislature, pursuant to its plenary power to establish or dissolve local
agencies and subdivisions as it sees fit, may, but need not, authorize
redevelopment agencies. (Cal. Const., art. IV, § 1.) If it does choose to authorize
such agencies, it may, but need not, authorize their receipt of property tax
increment. (Id., art. XVI, § 16.) However, if it authorizes such agencies and,
moreover, authorizes their receipt of tax increment, it may not thereafter require
that such allocated tax increment be remitted for the benefit of schools or other
local agencies. (Id., art. XIII, § 25.5, subd. (a)(7)(A).) Assembly Bill 1X 26

24     As discussed, Assembly Bill 1X 27 contains, in addition to an interstatutory
severability clause (Assem. Bill 1X 27, § 4), an intrastatutory nonseverability
clause that invalidates the remainder of Assembly Bill 1X 27 if Assembly Bill
1X 27‘s section 2 is struck down. (Assem. Bill 1X 27, § 5.) The Association and
amicus curiae Community Redevelopment Agency of the City of Los Angeles
suggest the intrastatutory nonseverability clause invalidates the interstatutory
severability clause. But the clear intent of an intrastatutory nonseverability clause
like section 5 of Assembly Bill 1X 27 is to prevent the other substantive
provisions of an enactment from taking effect; it is not to invalidate other
metaprovisions of an enactment—such as section 5 itself—that speak to the
effectiveness of provisions of an enactment in the event of partial invalidation.
The section 4 interstatutory severability clause, another metaprovision, is likewise
exempt from the invalidating reach of section 5.

                                         49
respects these narrow limits on the Legislature‘s power; Assembly Bill 1X 27 does
not.

       E. The Future Implementation of Assembly Bill 1X 26
       When we accepted jurisdiction over the Association‘s petition, we stayed
implementation of the provisions of part 1.85 of division 24 of the Health and
Safety Code. (§§ 34170-34191.) Numerous critical deadlines contained in that
part have passed and can no longer be met. (See §§ 34170, subd. (a) [all
provisions in pt. 1.85 are operative on Oct. 1, 2011, unless otherwise specified],
34172, subd. (a)(1) [dissolving redevelopment agencies], 34173 [creating
successor agencies], 34175, subd. (b) [transferring redevelopment agency assets to
successor agencies], 34177, subd. (l)(2)(A) [requiring successor agency to prepare
a draft obligation payment schedule by Nov. 1, 2011].)
       This impossibility ought not to prevent the Legislature‘s valid enactment
from taking effect. As Matosantos urges, and the Association does not contest, we
have the power to reform a statute so as to effectuate the Legislature‘s intent
where the statute would otherwise be invalid. (Kopp v. Fair Pol. Practices Com.
(1995) 11 Cal.4th 607, 660-661.) Here, the problem is not invalidity but
impossibility: the need, recognized by both sides, to put to rest constitutional
questions concerning these measures, when combined with a stay issued to
preserve the court‘s jurisdiction to issue meaningful relief, has rendered it
impossible for the parties and others affected to comply with the legislation‘s
literal terms. By exercising the power of reform, however, we may as closely as
possible effectuate the Legislature‘s intent and allow its valid enactment to have
its intended effect. Reformation is proper when it is feasible to do so in a manner
that carries out those policy choices clearly expressed in the original legislation,
and when the legislative body would have preferred reform to ineffectuality. (Id.

                                          50
at p. 661.) We think it clear that (1) the Legislature would have preferred
Assembly Bill 1X 26 to take effect on a delayed basis, rather than not at all, and
(2) the timeline provided for in Assembly Bill 1X 26 can be reformed in a fashion
that cleaves sufficiently to legislative intent.
       In recognition of the eventuality that upholding any part of Assembly Bill
1X 26 or 1X 27 would require us to address the impact of our stay on their
statutory deadlines, we solicited input from the parties as to appropriate new
deadlines. Because we have invalidated Assembly Bill 1X 27, we need consider
only the extent to which deadlines in part 1.85 must be extended to account for the
stay, while taking effect as promptly as the Legislature intended.
       The parties‘ proposals involve elaborate schedules shifting each deadline in
part 1.85 by a varying number of days. We decline to adopt any of the proposed
schedules, whose implementation would overly complicate future compliance.
Instead, we note that our stay of part 1.85 has been in place for four months and
has delayed operation of that part of Assembly Bill 1X 26 by a like amount. By
reforming Assembly Bill 1X 26 to extend each of its deadlines by the duration of
our stay, we retain the relative spacing of events originally intended by the
Legislature and simplify compliance for all affected parties.
       Accordingly, we exercise our power of reformation and revise each
effective date or deadline for performance of an obligation in part 1.85 of division
24 of the Health and Safety Code (§§ 34170-34191) arising before May 1, 2012, to
take effect four months later.25 By way of example, under section 34170,

25      We make an exception for actions that were to be taken by September 1,
2011. (See, e.g., § 34173, subd. (d)(1).) There, we extend the deadline to 15 days
after the issuance of our opinion and lifting of the stay, i.e., January 13, 2012,
rather than January 1.

                                           51
subdivision (a), all provisions in part 1.85 were to be operative on October 1,
2011, unless otherwise specified; our reformation makes them operative on
February 1, 2012. The draft obligation payment schedules due on November 1,
2011, under section 34177, subdivision (l)(2)(A), are now due March 1, 2012.26
Successorship agency board membership, required to be determined by January 1,
2012 (§ 34179, subd. (a)), must be complete by May 1, 2012. Similar
reformations apply to all other imminent obligations throughout part 1.85. In
contrast, no reformation is needed for future obligations to be carried out in
subsequent fiscal years. (E.g., §§ 34179, subds. (j)-(l) [provisions for
successorship agency boards in 2016 and later], 34182, subd. (c)(3) [ongoing
county auditor-controller obligation to prepare estimates of allocations and
distributions every Nov. 1 and May 1].)
       Where a provision imposes obligations in both this and subsequent fiscal
years, we reform the provision only as it relates to obligations arising before
May 1, 2012. Thus, for example, section 34183 requires certain calculations from
county auditor-controllers by January 16, 2012, and June 1, 2012, for this fiscal
year, and on January 16 and June 1 in subsequent years. (§ 34183, subd. (a).) We
reform the January 16, 2012, deadline by extending it to May 16, 2012, and leave
the remaining deadlines unchanged. Likewise, section 34185 provides for
distributions on each January 16 and June 1; we reform the first distribution
deadline by extending it to May 16, 2012, and leave all subsequent deadlines
unchanged, so that future distributions may occur on the schedule, and in the same
fiscal year, originally contemplated by the Legislature.

26     In contrast, the period to be covered by these schedules—through July 1,
2012, the end of the fiscal year—is not an obligation and is thus unchanged by our
reformation. (See § 34177, subd. (l)(2)(A).)

                                          52
                                  III. DISPOSITION
       For the foregoing reasons, we discharge the order to show cause, deny the
Association‘s petition for a peremptory writ of mandate with respect to Assembly
Bill 1X 26, except for Health and Safety Code section 34172, subdivision (a)(2),
and grant its petition with respect to Assembly Bill 1X 27. We direct issuance of a
peremptory writ compelling the state Director of Finance and state Controller not
to implement Health and Safety Code sections 34172, subdivision (a)(2) and
34192-34196. We extend all statutory deadlines contained in Health and Safety
Code, division 24, part 1.85 (§§ 34170-34191) and arising before May 1, 2012, by
four months. Given the urgency of the matters addressed by the Association‘s
petition, our judgment is final forthwith. (See, e.g., Senate of the State of Cal. v.
Jones (1999) 21 Cal.4th 1142, 1169.)
                                                   WERDEGAR, J.
WE CONCUR:
KENNARD, J.
BAXTER, J.
CHIN, J.
CORRIGAN, J.
LIU, J.

                                          53
                  CONCURRING & DISSENTING OPINION
                      BY CANTIL-SAKAUYE, C. J.

       I concur in parts II.A., II.B., and II.E. of the majority opinion, but
respectfully dissent from the remainder of the opinion concerning the
constitutionality of Assembly Bill 1X 27.1 The majority concludes that Assembly
Bill 1X 27 is unconstitutional because it violates article XIII, section 25.5,
subdivision (a)(7)(A) of the California Constitution (added by Prop. 22, approved
by voters, Gen. Elec. (Nov. 2, 2010)). I part with the majority on this point
because, although it may be possible that Assembly Bill 1X 27 may cause some
community sponsors2 to utilize funds otherwise protected by Proposition 22,
petitioners have not met their burden of supporting this contention. In fact, they
provide documentation that suggests quite the opposite. Moreover, on its face,
nothing in Assembly Bill 1X 27 compels community sponsors to violate
Proposition 22. Ultimately, the majority‘s conclusion rests on an impermissibly

1      This bill added part 1.9 to division 24 of the Health and Safety Code and
enacted 14 statutes, Health and Safety Code sections 34192, 34192.5, 34193,
34193.1-34193.3, 34194, 34194.1-34194.5, 34195, 34196. For sake of
consistency, I will use the same designation used by the majority, Assembly
Bill 1X 27, in making general references to these statutes.
2      Also consistent with the majority‘s terminology, I will use the term
―community sponsor‖ to describe the local government body, such as a city or
county, that may elect to make payments required by Assembly Bill 1X 27 in
order to continue redevelopment practices.

                                           1
broad reading of Proposition 22 plain language, on unsupported assumptions
concerning the intent behind Proposition 22, and on speculation that constitutional
problems could result from the implementation of Assembly Bill 1X 27. In doing
so, the majority does not apply well-settled rules of statutory and constitutional
construction.

                    I.   Facial Challenges and the Rules of Statutory
                             and Constitutional Construction
       I first address the applicable rules concerning petitioners‘ facial challenge
of Assembly Bill 1X 27 and the interpretative framework governing challenges to
the constitutionality of the statutes enacted by this bill.

           A. Facial Challenges versus “As Applied” Challenges
       Generally, a facial challenge to the constitutionality of legislation
―considers only the text of the measure itself, not its application to the particular
circumstances of an individual.‖ (Tobe v. City of Santa Ana (1995) 9 Cal.4th
1069, 1084.) In contrast, an ―as applied‖ challenge to the constitutionality of
legislation involves an otherwise facially valid measure that has been applied in a
constitutionally impermissible manner. This type of challenge ―contemplates
analysis of the facts of a particular case or cases to determine the circumstances in
which the [measure] has been applied and to consider whether in those particular
circumstances the application deprived the individual to whom it was applied of a
protected right.‖ (Ibid.)
       Petitioner California Redevelopment Association concedes that it is making
a facial challenge to Assembly Bill 1X 27.3 ―A facial challenge to a legislative

3      Given the procedural posture of this case — an application to declare the
statutes enacted by Assembly Bill 1X 26 and Assembly Bill 1X 27
unconstitutional after we have substantially stayed their enforcement — it seems
                                                              (footnote continued on next page)

                                            2
Act is, of course, the most difficult challenge to mount successfully, since the
challenger must establish that no set of circumstances exists under which the Act
would be valid.‖ (United States v. Salerno (1987) 481 U.S. 739, 745.) The
circumstance that an act ―might operate unconstitutionally under some
conceivable set of circumstances is insufficient to render it wholly invalid‖ under a
facial challenge. (Ibid.)

             B. Petitioners’ Burden Under a Facial Challenge
        In describing petitioners‘ burden, we have sometimes articulated differing
standards. Under the strictest standard, ― ‗[t]o support a determination of facial
unconstitutionality, voiding the statute as a whole, petitioners cannot prevail by
suggesting that in some future hypothetical situation constitutional problems may
possibly arise as to the particular application of the statute . . . . Rather,
petitioners must demonstrate that the act‘s provisions inevitably pose a present
total and fatal conflict with applicable constitutional prohibitions.‘ ‖ (Arcadia
Unified School Dist. v. State Dept. of Education (1992) 2 Cal.4th 251, 267,
quoting Pacific Legal Foundation v. Brown (1981) 29 Cal.3d 168, 180-181.)
Under the more lenient standard, petitioners need only demonstrate that the
measure ―conflicts with [the Constitution] ‗in the generality or great majority of
cases.‘ [Citations.]‖ (Guardianship of Ann S. (2009) 45 Cal.4th 1110, 1126.)

(footnote continued from previous page)

very difficult, if not impossible, for petitioners to perfect an ―as applied‖ challenge
by arguing that the measures have been or will be enforced in an unconstitutional
manner in any particular case. (Tobe v. City of Santa Ana, supra, 9 Cal.4th at
pp. 1092-1093.) In any event, as I will explain in greater detail in part II.D., the
documentation that petitioner presents does not establish that the enforcement of
Assembly Bill 1X 27 necessarily will result in a violation of Proposition 22 in any
particular case.

                                            3
       It is unclear which standard the majority employs, but, as I will explain, I
believe petitioners have not met their burden under either standard concerning the
alleged unconstitutionality of the statutes enacted by Assembly Bill 1X 27.

           C. The Applicable Interpretative Rules of Constitutional and Statutory
              Construction
       In assessing the merits of petitioners‘ facial challenge, we are governed by
a specific interpretative framework that constrains how we must view the
interaction between the statutes enacted by Assembly Bill 1X 27 and Proposition
22.
       As the majority notes, Proposition 22, which added subdivision (a)(7)(A) to
section 25.5 of article XIII of the California Constitution, limits what the
Legislature may do with respect to redevelopment agency tax increment funds.
Respondent Matosantos correctly argues that Proposition 22 imposes a
constitutionally based limitation on the powers of the Legislature, and we must
construe such limits strictly. (White v. Davis (2003) 30 Cal.4th 528, 539-540;
Pacific Legal Foundation, supra, 29 Cal.3d at p. 180.) This strict construction of
the constitutional limits on legislative power is required because ― ‗ ―we do not
look to the Constitution to determine whether the legislature is authorized to do an
act, but only to see if it is prohibited.‖ [Citation.]‘ ‖ (White v. Davis, supra, at
p. 539, quoting Methodist Hosp. of Sacramento v. Saylor (1971) 5 Cal.3d 685,
691.) Given that legislative power is ― ‗ ―practically absolute,‖ ‘ ‖ any
constitutional limitations on this power are strictly construed and may not be given
effect as against the general power of the Legislature ― ‗ ―unless such limitations
clearly inhibit the act in question.‖ ‘ ‖ (Amwest Surety Ins. Co. v. Wilson (1995)
11 Cal.4th 1243, 1255 (Amwest).) Accordingly, in the face of a constitutionally
based limitation on its power, ― ‗ ―[i]f there is any doubt as to the Legislature‘s
power to act in any given case, the doubt should be resolved in favor of the

                                           4
Legislature‘s action.‖ ‘ ‖ (White v. Davis, supra, at p. 539, quoting Methodist
Hosp. of Sacramento v. Saylor, supra, at p. 691.)
       Furthermore, although ― ‗[t]he judiciary‘s traditional role of interpreting
ambiguous statutory language or ―filling in the gaps‖ of statutory schemes is . . . as
applicable to initiative measures as it is to measures adopted by the Legislature,‘ ‖
we have warned that ―the initiative power is strongest when courts give effect to
the voters‘ formally expressed intent, without speculating about how they might
have felt concerning subjects on which they were not asked to vote.‖ (Ross v.
RagingWire Telecommunications, Inc. (2008) 42 Cal.4th 920, 930, quoting
Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1202.) Therefore, unless
―the text is ambiguous and supports multiple interpretations,‖ our court must rely
upon ―the text as the first and best indicator of intent.‖ (Kwikset Corp. v. Superior
Court (2011) 51 Cal.4th 310, 321.) Even ―a command that a constitutional
provision or a statute be liberally construed ‗does not license either enlargement or
restriction of its evident meaning‘ ‖ because unambiguous language requires no
need for engaging in liberal construction.4 (Apartment Assn. of Los Angeles
County, Inc. v. City of Los Angeles (2001) 24 Cal.4th 830, 844, quoting People v.
Cruz (1974) 12 Cal.3d 562, 566.)
       As for our interpretation of the statutes enacted by Assembly Bill 1X 27,
we presume the constitutionality of a legislative act, resolving all doubts in its
favor, and we must uphold it unless a ― ‗conflict with a provision of the state or
federal Constitution is clear and unquestionable.‘ ‖ (Amwest, supra, 11 Cal.4th at
p. 1252.) This presumption is particularly appropriate when, as here, ―the statute

4      In interpreting Proposition 22, the majority opinion fails to acknowledge
this particular rule of interpretation.

                                           5
represents a considered legislative judgment as to the appropriate reach of the
constitutional provision.‖ (Pacific Legal Foundation v. Brown, supra, 29 Cal.3d
at p. 180; see Legis. Analyst‘s Off., The 2011-12 Budget: Should California End
Redevelopment Agencies? (Feb. 9, 2011) p. 12 [warning the Legislature that
Prop. 22 and other measures limit ―the state‘s authority to shift property taxes
and/or redirect tax increment revenues‖ and that ―[d]rafting a plan for local
governments to carefully unwind their redevelopment programs and successfully
navigate the many legal, administrative, and financial factors will be complex‖].)
       From these principles, I conclude that our analysis must begin with the
presumption that Assembly Bill 1X 27 is constitutionally valid unless it conflicts
with the state Constitution in a clear and unquestionable manner. Because
Proposition 22 restricts the Legislature‘s power, it must be strictly construed. But
even though Proposition 22 contains a demand that it be liberally construed, as
with any statute, we cannot give Proposition 22 an interpretation beyond its
formally expressed intent if its language is clear.

                          II. Interpreting Proposition 22
       I conclude that, even assuming the circumstances most favorable to
petitioners — applying the more lenient standard for facial challenges and broadly
construing Proposition 22 — petitioners have failed to sustain their burden to
show that Assembly Bill 1X 27 is unconstitutional.

           A. Proposition 22 and Assembly Bill 1X 27 Generally
       Proposition 22 prohibits the Legislature from requiring ―a community
redevelopment agency . . . to pay, remit, loan, or otherwise transfer, directly or
indirectly, taxes on ad valorem real property and tangible personal property
allocated to the agency pursuant to Section 16 of Article XVI [i.e., its tax
increment funds].‖ (Cal. Const., art. XIII, § 25.5, subd. (a)(7)(A).) Given the

                                          6
rules of interpretation described ante, it is important to note what, exactly, this
constitutional provision expressly prohibits: the Legislature cannot require a
redevelopment agency to directly or indirectly reallocate its tax increment funds.
       In contrast, Assembly Bill 1X 27 does not require or compel any
redevelopment agency to make any payment. It specifically provides that the
community sponsor, whether it be a city, county, or other local government entity,
―may use any available funds not otherwise obligated for other uses‖ to make a
payment. (Health & Saf. Code, § 34194.1, subd. (a).)5 The payments required by
Assembly Bill 1X 27 to establish or continue redevelopment agencies are to be
made by community sponsors, not redevelopment agencies. Although Assembly
Bill 1X 27, through the enactment of section 34194.2, permits a community
sponsor to enter into an agreement with its redevelopment agency to use its tax
increment to fund the payment, such agreements are not compelled or required by
Assembly Bill 1X 27.6 Moreover, nothing in Assembly Bill 1X 27 requires that a

5     Unless otherwise noted, all further statutory references are to the Health
and Safety Code.
6       Petitioner County of Santa Clara argues that one of the statutes enacted by
Assembly Bill 1X 27 is unconstitutional because section 34194.2 allows loans of
tax increment funds to finance Assembly Bill 1X 27 payments in violation of
article XVI, section 16, of the state Constitution, which mandates that tax
increment funds be used to finance redevelopment projects. But section 34194.2
cannot be facially unconstitutional because its language is permissive — ―a city or
county may enter into an agreement with the redevelopment agency‖ to make such
loans of local tax increment funds. (Italics added.) This provision, therefore, does
not ―inevitably pose a present total and fatal conflict with applicable constitutional
prohibitions.‖ (Pacific Legal Foundation v. Brown, supra, 29 Cal.3d 168, 181.)
Moreover, even under the more liberal standard for facial challenges, as I will
explain in part II.D., petitioners have failed to show that section 34194.2 will
generate potential violations of the state Constitution ― ‗in the generality or great
majority of cases.‘ ‖ (Guardianship of Ann S., supra, 45 Cal.4th 1110, 1126.)

                                           7
redevelopment agency‘s tax increment be reallocated, either directly or indirectly,
to satisfy the payments. Instead, the measure is neutral as to the source of funds
for the Assembly Bill 1X 27 payments.7

           B. The Applicable Language of Proposition 22 Does Not Require a
              Liberal Construction
       The majority asserts that California Constitution article XIII, section 25.5,
subdivision (a)(7) (as added by Prop. 22) is ambiguous, thereby requiring an
examination of its history to ascertain its intended meaning. The majority
identifies as ambiguous Proposition 22‘s use of the words ―indirectly‖ and
―directly,‖ especially in view of prior statutory shifts involving ERAF‘s pursuant

7       For this same reason, Assembly Bill 1X 27‘s revenue-neutral provision,
clarifying that a community sponsor ―may use any available funds not otherwise
obligated for other uses‖ to make the Assembly Bill 1X 27 payments (Health &
Saf. Code, § 34194.1, subd. (a)), also forecloses petitioners‘ facial challenge based
on other provisions of Proposition 22 and on Proposition 1A (as approved by
voters, Gen. Elec. (Nov. 2, 2004)). Proposition 1A amended the state Constitution
to limit the Legislature‘s ability to reallocate property taxes unless passed by a
two-thirds vote, but nothing in Assembly Bill 1X 27 requires the payments to
come from this source. In addition, the mere fact that section 34194.1, subdivision
(b) labels its payments as ―property taxes‖ for a single fiscal year, for the purpose
of offsetting the state‘s school funding obligations in that year, does not violate
Proposition 1A as petitioner County of Santa Clara argues. No provision of
Assembly Bill 1X 27 alters the existing distribution of local property tax revenue
actually collected by counties, and section 34194.1‘s terminology is simply an
extension of the ―accounting device‖ established by the Educational Revenue
Augmentation Funds (ERAF‘s). (Los Angeles Unified School Dist. v. County of
Los Angeles (2010) 181 Cal.App.4th 414, 426.) Similarly, another provision of
Proposition 22 amended the state Constitution to ensure that the Legislature could
not ―reallocate, transfer, borrow, appropriate, restrict the use of, or otherwise use
the proceeds of any tax imposed or levied by a local government solely for the
local government‘s purposes.‖ (Cal. Const., art. XIII, § 24, subd. (b).) But
nothing in Assembly Bill 1X 27 redirects the proceeds of an otherwise dedicated
local tax toward making the Assembly Bill 1X 27 payments.

                                          8
to which the Legislature diverted redevelopment agency tax increment revenue to
fund schools.
       The majority notes that a distinct provision in each of those prior ERAF
shifts, going back to 2003, allowed the shift to be funded in a revenue-neutral and
source-neutral manner and without necessarily using tax increment funds. For
instance, in the legislation enacting the last ERAF shift, which directly led to
Proposition 22‘s placement on the November 2010 ballot, the Legislature included
statute that did not require the ERAF shift payment to come specifically from tax
increment funds, but instead provided that in order ―[t]o make the allocation
required by this section, an agency may use any funds that are legally available
and not legally obligated for other uses, including, but not limited to, reserve
funds, proceeds of land sales, proceeds of bonds or other indebtedness, lease
revenues, interest, and other earned income.‖ (Health & Saf. Code, § 33690.5,
subd. (b), italics added.) It also included a ―catch-all‖ statute that allowed a local
legislative body, in lieu of the redevelopment agency, to make the ERAF payments
―from any funds that are legally available for this purpose.‖ (Health & Saf. Code,
§ 33692, subd. (c), italics added.) Accordingly, the majority reasons that
Proposition 22‘s language, prohibiting the direct or indirect transfer of tax
increment funds, is specifically intended to stop the kind of payments described by
Assembly Bill 1X 27.
       However, Proposition 22‘s plain language simply does not prohibit the kind
of payments described by Assembly Bill 1X 27.
       Proposition 22 prohibits the Legislature from requiring ―a community
redevelopment agency . . . to pay, remit, loan, or otherwise transfer, directly or
indirectly,‖ its tax increment funds. (Cal. Const., art. XIII, § 25.5, subd. (a)(7)(A),
italics added.) As previously described, however, the Assembly Bill 1X 27
payments must be made by community sponsors, not redevelopment agencies.

                                           9
Nothing in Assembly Bill 1X 27 requires a redevelopment agency ―to pay, remit,
loan, or otherwise transfer, directly or indirectly,‖ its tax increment funds. If
Proposition 22 intended to prohibit the payments described by Assembly Bill 1X
27, it could have been written to prohibit the Legislature from requiring a local
government body or community sponsor ―to pay, remit, loan, or otherwise transfer,
directly or indirectly,‖ its tax increment funds. But it was not drafted that way.
       Additionally, nothing in Proposition 22 restricts the Legislature from using
tax increment funds as the basis for a particular calculation. Certainly, Assembly
Bill 1X 27 uses the size of tax increment funds as a ―yardstick‖ or, as the majority
characterizes it a ―levy,‖ to determine the size of the described payments, but such
use is not prohibited by Proposition 22‘s plain language.
       Pointedly, the word ―levy‖ appears nowhere in Proposition 22. Instead, the
drafters of Proposition 22 listed a very specific catalog of actions, prohibiting the
Legislature from requiring a redevelopment agency ―to pay, remit, loan, or
otherwise transfer‖ its tax increment funds. (Cal. Const., art. XIII, § 25.5,
subd. (a)(7)(A), italics added.) ― ‗[W]hen a statute contains a list or catalogue of
items, a court should determine the meaning of each by reference to the others,
giving preference to an interpretation that uniformly treats items similar in nature
and scope. [Citations.] In accordance with this principle of construction, a court
will adopt a restrictive meaning of a listed item if acceptance of a more expansive
meaning would make other items in the list unnecessary or redundant, or would
otherwise make the item markedly dissimilar to the other items in the list.
[Citations.]‘ ‖ (Commission on Peace Officer Standards & Training v. Superior
Court (2007) 42 Cal.4th 278, 294, quoting Moore v. California State Bd. of
Accountancy (1992) 2 Cal.4th 999, 1011-1012.) Placing aside the problem that
the list of verbs applies only to redevelopment agencies, expansively reading the
word ―levy‖ into the list of prohibited actions would conflict with the other words

                                          10
in the list describing actions that ―otherwise transfer‖ tax increment funds, making
the remaining words unnecessary or redundant. If Proposition 22 truly intended to
prevent the Legislature from using tax increment funds as the basis for calculating
certain payments or as the basis of a levy, it could have been written to prohibit the
Legislature from requiring ―a community redevelopment agency to pay, remit,
loan, or otherwise transfer, directly or indirectly,‖ its tax increment funds ―or to
levy such revenues or use them as the basis for certain remittances.‖ But again, it
was not drafted that way.

           C. A Liberal Construction of Proposition 22 Does Not Render
              Assembly Bill 1X 27 Facially Unconstitutional
       Even if Proposition 22‘s use of the words ―directly‖ or ―indirectly‖ is
ambiguous and raises colorable questions of whether Proposition 22 might apply
to community sponsors or whether it might prohibit the use of tax increment funds
as a ―yardstick‖ or ―levy,‖ I still cannot agree with the majority‘s conclusion that
Assembly Bill 1X 27 is unconstitutional.

                   1. A Broad Construction of the Word “Indirectly”
       The express obligation to make the payments to establish or continue
redevelopment agencies rests on community sponsors, and not on redevelopment
agencies themselves and Assembly Bill 1X 27 does not expressly compel the use
of tax increment funds to make the Assembly Bill 1X 27 payments. However, the
majority relies on the history of prior ERAF legislation and apparently infers that
Proposition 22 intended its use of the word ―indirectly‖ to cover the entire
scenario posed by the Assembly Bill 1X 27 payments. But a careful dissection of
the 2009 ERAF legislation, much of which was the immediate trigger for
Proposition 22, illustrates why this reasoning is erroneous.
       As relevant here, the 2009 ERAF shift legislation covered two fiscal years
and was comprised of four different statutes. (Assem. Bill No. 26 (2009-2010 4th

                                          11
Ex. Sess.) enacted as Stats. 2009, 4th Ex. Sess., ch. 21, §§ 6-9; §§ 33690 [for fiscal
year 2009-2010], 33690.5 [for fiscal year 2010-2011], 33691, and 33692.)8 A
review of the first three of these statutes reveals that the Legislature clearly
targeted redevelopment agencies and their tax increments as the funding source for
the ERAF shifts. But the fourth statute, section 33692, was a stand-alone, catch-
all provision that, unlike the other three statutes, expressed a revenue-neutral
stance as to the money used to fund the ERAF shifts. As I will explain, no liberal
construction of Proposition 22 can stretch to prohibit similar revenue-neutral
provisions enacted by Assembly Bill 1X 27.
       The first two statutes specify that a redevelopment agency ―shall remit‖ the
ERAF shifts, and that payments were to be based directly on a proportion of the
redevelopment agency‘s net tax increment. (§§ 33690, subd. (a), 33690.5,
subd. (a), italics added.) Both statutes state that the ERAF remittance for each
fiscal year is ―declared to be an indebtedness of the redevelopment project to
which they relate, payable from‖ tax increment funds. (§§ 33690, subd. (e),
33690.5, subd. (e).) Each statute also states, however, that the redevelopment
agency could make the payment by using any of the redevelopment agency‘s other
available revenue sources. (§§ 33690, subd. (b), 33690.5, subd. (b).) Each further
declares, ―[i]t is the intent of the Legislature, in enacting this section, that these

8       Over a year later, the Legislature added a fifth statute, section 33691.5, that
allowed indebted redevelopment agencies to enter into a long-term payment plan
with the state to eventually pay off any outstanding ERAF remittances for fiscal
years 2009-2010 and 2010-2011. (Sen. Bill No. 863 (2009-2010 Reg. Sess.)
enacted as Stats. 2010, ch. 722, § 8.) Because this measure was signed into law on
October 19, 2010, well after Proposition 22 qualified for placement on the
November 2, 2010 election ballot, section 33691.5 could not have affected the
intent of the drafters of Proposition 22. Accordingly, it bears no relevance to our
analysis of what Proposition 22 intended to prohibit.

                                           12
allocations directly or indirectly assist in the financing or refinancing, in whole or
in part, of the community‘s redevelopment project pursuant to Section 16 of
Article XVI of the California Constitution.‖ (§§ 33690, subd. (f), 33690.5,
subd. (f), italics added.)
       Under both the plain language of Proposition 22 and a liberal construction
of its use of the word ―indirectly,‖ the Legislature is clearly prohibited from
enacting future legislation identical to these first two statutes. Because these first
two statutes, sections 33690 and 33690.5, compelled redevelopment agencies to
make the ERAF remittances and defined the revenue shifts, whether from tax
increment funding or other available revenue, as part of the redevelopment
agency‘s indebtedness, payable from tax increment funds, the drafters of
Proposition 22 responded by including language that would prohibit the
Legislature from enacting future legislation requiring ―a community
redevelopment agency . . . to pay, remit, loan, or otherwise transfer, directly or
indirectly,‖ its tax increment funds. (Cal. Const., art. XIII, § 25.5, subd. (a)(7)(A),
italics added.)
       To the extent that sections 33690 and 33690.5 also provide that the
redevelopment agency could make the ERAF remittances by using any of the
agency‘s other revenue sources not related to tax increment funds, a liberal
construction of Proposition 22 also would forbid similar measures in the future.
Although a redevelopment agency‘s use of otherwise available, non-tax-increment
revenue cannot be a compelled direct remittance of its tax increment funds, such
use may constitute an indirect remittance of its tax increment funds by imposing
an additional, immediate financial obligation on the redevelopment agency‘s
otherwise fixed budget. Thus, the provisions in these first two statutes allowing
the ERAF remittance to be funded by other redevelopment agency revenue would
be prohibited by Proposition 22 because such a provision would require ―a

                                          13
community redevelopment agency . . . to pay, remit, loan, or otherwise transfer,
directly or indirectly,‖ its tax increment funds. (Cal. Const., art. XIII, § 25.5,
subd. (a)(7)(A), italics added.)
       A third statute from the 2009 ERAF legislation allows a redevelopment
agency to make partial ERAF remittances if its existing indebtedness made it
impossible for the agency to fund the entire ERAF shift. (§ 33691.) ―Existing
indebtedness‖ is defined in this section as a financial obligation incurred by the
redevelopment agency that required ―the payment of which is to be made in whole
or in part, directly or indirectly, out of‖ tax increment funds. (§ 33691,
subd. (a)(1), italics added.) This section contains a provision allowing the
redevelopment agency to obtain a loan from its local government for the ERAF
payment, but it also specifies that this loan becomes part of the agency‘s
indebtedness that ―shall be payable from tax revenues apportioned to the agency
pursuant to Section 33670 [i.e., tax increment funds], and any other funds received
by the agency.‖ (§ 33691, subd. (d)(2), italics added.)
       Again, both the plain language of Proposition 22 and a liberal construction
of it would prohibit this kind of statute in the future. The loan anticipated by
section 33691 must be directly tied into a redevelopment agency‘s tax increment
funds, and the loan also is indirectly tied to tax increment funding by virtue of
continued reliance on ―other funds received by the agency.‖ (§ 33691, subd.
(d)(2).) Pointedly, Proposition 22 mirrors the same ―directly or indirectly‖
language used by section 33691, subdivision (a)(1). A future version of this third
statute, therefore, would be prohibited under Proposition 22 because it would
require ―a community redevelopment agency . . . to pay, remit, loan, or otherwise
transfer, directly or indirectly,‖ its tax increment funds. (Cal. Const., art. XIII,
§ 25.5, subd. (a)(7)(A), italics added.)

                                           14
       Finally, a fourth statute from the 2009 ERAF legislation is markedly
different from its sister statutes. This fourth statute contains a catch-all phrase
allowing a local ―legislative body‖ to make the ERAF remittances on behalf of the
redevelopment agency using ―any funds that are legally available for this
purpose.‖ (§ 33692, subd. (c).) The statute‘s revenue source is neutral and allows
payment with ―no strings attached,‖ in the sense that it contains no provision,
unlike section 33691, subdivision (d), that converts the payment into an
redevelopment agency debt that is payable, either directly or indirectly, through its
tax increment funds. To use the majority‘s terminology, this fourth statute acts as
a kind of ―levy‖ on tax increment funds that can be paid by a local government
body using any available revenue source.
       Here, I expose the Achilles‘ heel of the majority‘s reasoning concerning the
unconstitutionality of Assembly Bill 1X 27. Proposition 22‘s plain language
simply says nothing about the ―yardstick‖ or ―levy‖ scenario posed by this fourth
statute in section 33692. The language of Proposition 22 constrains the
Legislature from requiring ―a community redevelopment agency‖ from making
certain allocations of its tax increment, either ―directly or indirectly.‖ (Cal.
Const., art. XIII, § 25.5, subd. (a)(7)(A).) Proposition 22 does not address a local
―legislative body‖ nor does it address in any respect the use of otherwise unrelated
local revenue to pay a ―levy‖ on tax increment funds.
       Even a liberal construction of Proposition 22 yields no different conclusion.
The only possible ambiguity in the relevant language concerns the use of the word
―indirectly,‖ but that word is bound to the otherwise precise transitive verbs,
―pay,‖ ―remit,‖ ―loan,‖ and ―transfer,‖ all of which are bound to the subject, ―a
community redevelopment agency,‖ and the constitutionally protected object, tax
increment funds. Simple rules of grammar, therefore, necessarily limit how
liberally we may construe the word ―indirectly.‖ (Civ. Code, § 13; Busching v.

                                          15
Superior Court (1974) 12 Cal.3d 44, 52 [―ordinary rules of grammar‖ normally
―must be applied unless they lead to an absurd result‖].) Therefore, the word
―indirectly‖ in plain language prohibits any compulsion being placed on a
redevelopment agency to make certain reallocations (not levies) of its tax
increment funds (but not other sources of local revenue).
       As petitioner California Redevelopment Association conceded at oral
argument, there are several sources of local revenues not protected by either
Proposition 1A or Proposition 22, including, among other things, rental income,
lease income, interest income, sales of government-owned assets, sales of bonds,
investment income, and fines, fees, and penalties. Given that such revenues bear
no relation to any financing received by a redevelopment agency, it seems
impossible to conclude on a facial challenge, as the majority does, that Assembly
Bill 1X 27 payments funded by these revenues could ever cause a redevelopment
agency to indirectly transfer tax increment funds already allocated to it.
       Certainly, as previously described, a liberal construction of the word
―indirectly‖ can be applied to prohibit the first three statutes of the 2009 ERAF
legislation because they each contained mandates directed at redevelopment
agencies and either directly targeted agencies‘ tax increment funds or indirectly
targeted their tax increment funds by assigning the ERAF shift as indebtedness
payable from the redevelopment agency‘s revenue sources. Sections 33690
through 33691 express the premise that the ERAF remittances must come from the
redevelopment agency, and, to the extent they do not, the nonpayment becomes
part of the redevelopment agency‘s debt. In fact, the legislation specifically
defines a redevelopment agency‘s preexisting debt as redevelopment agency
payments that have to be made, directly or indirectly, out of tax increment funds.
Further, the 2009 ERAF legislation asserts that the ERAF remittances were
intended to directly or indirectly further redevelopment projects within the

                                         16
meaning of article XVI of the Constitution. Accordingly, article XVI, section
25.5, subdivision (a)(7)(A) of the Constitution, as enacted by Proposition 22, is
completely responsive to the circumstances contemplated by sections 33690
through 33691 by prohibiting the Legislature from requiring ―a community
redevelopment agency . . . to pay, remit, loan, or otherwise transfer, directly or
indirectly, taxes on ad valorem real property and tangible personal property
allocated to the agency pursuant to Section 16 of Article XVI [i.e., its tax
increment funds].‖
       But the fourth statute — section 33692 — poses an entirely different
scenario, one that does not require a redevelopment agency to do anything, let
alone require it to reallocate its tax increment funds, either directly or indirectly. It
contemplates a situation not addressed by Proposition 22, even under a broad
construction of that measure. Nevertheless, simply because section 33692 has an
analog in Assembly Bill 1X 27 in the form of section 34194.l,9 the majority hastily
concludes that Proposition 22 prohibits similar levies on tax increment funds. The
plain language, however, of section 25.5, subdivision (a)(7)(A) of article XIII of
the California Constitution, as enacted by Proposition 22, does not support such a
conclusion, even when liberally construed.
       The majority criticizes my reliance on the grammar and syntax of
Proposition 22 and cites our decision in Burris v. Superior Court (2005) 34
Cal.4th 1012 (Burris) for the notion that the normal rules of grammar must yield
to the drafters‘ intent ― ‗to solve human problems‘ ‖ and that we should approach

9      Like section 33692 from the 2009 ERAF legislation, section 34194.1
likewise explains that the Assembly Bill 1X 27 payments can be funded from any
available city or county ―funds not otherwise obligated for other uses.‖
(§ 34194.1, subd. (a).)

                                           17
― ‗an interpretive problem not as if it were a purely logical game, like a Rubik‘s
Cube, but as an effort to divine the human intent that underlies the statute.‘ ‖
(Id. at p. 1017, quoting J.E.M. AG Supply v. Pioneer Hi-Bred (2001) 534 U.S. 124,
156 (dis. opn. of Breyer, J.).) Placing aside the fact that the quote originally came
from a dissenting opinion by Justice Breyer that had nothing to do with rules of
grammar or syntax,10 any exception to the rules of grammar or syntax might have
some justification if we have been presented with the same scenario we faced in
Burris, where the disputed language ―could readily refer‖ to two different
circumstances, and the legislative history of the measure supplied no ―evidence the
Legislature chose a particular construction in order to implement one rule or the
other.‖ (Burris v. Superior Court, supra, 34 Cal.4th 1012, 1018.) But as I have
already explained, the relevant language of Proposition 22 is hardly ambiguous,
and, to the extent that it is ambiguous, any ambiguity cannot be stretched to give
the meaning the majority now assigns to it.11
       The only way the majority‘s interpretation of Proposition 22 could be
reconciled with its conclusion that it renders Assembly Bill 1X 27 unconstitutional
would be if Proposition 22 had been written with a different subject and a different
object, stating that the Legislature shall not: ―Require a community
redevelopment agency local government body . . . to pay, remit, loan, levy or

10     Instead, Justice Breyer used this language as a reason to take exception to
―interpretive canon that disfavors repeal by implication.‖ (J.E.M. AG Supply v.
Pioneer Hi-Bred, supra, 534 U.S. 124, 155 (dis. opn. of Breyer, J.).)
11      More importantly, even ignoring the measure‘s actual language, in part
II.C.2., I will explain that the drafters‘ express intent behind Proposition 22 does
not support the majority‘s broad ―human intent‖ interpretation, but instead is
entirely consistent with the measure‘s plain language. Thus, my reliance on the
syntax and grammar of Proposition 22 is but one additional reason, among others,
that causes me to depart from the views of my colleagues.

                                          18
otherwise transfer, directly or indirectly, funds based on taxes on ad valorem real
property and tangible personal property allocated to the its redevelopment agency
pursuant to Section 16 of Article XVI to or for the benefit of the State, any agency
of the State, or any jurisdiction . . . .‖ But Proposition 22 was not written that way.
If the proponents of Proposition 22 had intended to preclude a future version of
section 33692, the fourth statute in the 2009 ERAF legislation and its catch-all
allowing a ―local legislative body‖ to make remittances on behalf of the
redevelopment agency by using ―any funds that are legally available for this
purpose,‖ they had every opportunity to draft such language, but they did not.
Therefore, the plain language of Proposition 22 does not cover a section 33692
scenario, in which a city, county, or other local government body makes the
payment described by Assembly Bill 1X 27, nor can it properly be ―liberally
construed‖ as doing so.12

12      In a footnote (maj. opn., at p. 41, fn. 20), the majority claims that my
interpretation would not prohibit the Legislature from implementing in the future
any of the same statutes that were part of the 2009 ERAF legislation as long as it
also was accompanied by the fourth statute containing a catch-all option not
expressly prohibited by Proposition 22. This contention misconstrues both the
precise language of the 2009 ERAF statutes and the nature of facial challenges to
an individual statute. As previously described, on their face, the first three statutes
of the 2009 ERAF legislation are not ―options,‖ and each contains mandatory
language prohibited by Proposition 22. Because these three statutes either require
the redevelopment agency to remit its tax increment funds or require loans to be
backed by its tax increment funds, then their future iterations would be facially
barred under Proposition 22. By itself, any future iterations of the fourth catch-all
statute, section 33692, would never pose a problem of facial unconstitutionality as
measured against Proposition 22, because it is the only one of the four statutes that
truly presents an ―option‖ under its plain language.

                                          19
                   2. The History of Proposition 22
       In some circumstances involving constitutional amendments, ―[t]he literal
language of enactments may be disregarded to avoid absurd results and to fulfill
the apparent intent of the framers. [Citations.]‖ (Amador Valley Joint Union High
Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208, 245.) Proposition 22,
however, does not present such circumstances.
       Nothing in the history of Proposition 22 suggests that its plain language
must bend to some greater intention to shield tax increment funds from being used
as a mere yardstick or ―levy‖ for certain ERAF payments or that to hold otherwise
would generate an absurd result. Uncodified sections of Proposition 22 refer to
protecting against the reallocation of tax increment funds in a manner not more
expansive than, and entirely consistent with, the language it enacted in article XIII,
section 25.5, subdivision (a)(7)(A) of the state Constitution. (Prop. 22, Gen. Elec.
(Nov. 2, 2010) §§ 2, subd. (d)(3) [noting that the Legislature has previously
―[t]aken local community redevelopment funds on numerous occasions‖], 9
[asserting that the ―[t]he Legislature has been illegally circumventing Section 16
of Article XVI in recent years by requiring redevelopment agencies to transfer a
portion of those taxes for purposes other than the financing of redevelopment
projects‖ (italics added)].) Nothing in Proposition 22‘s history suggests that a
broader reading — one that applies to and prohibits other entities‘ legislative
bodies, or community sponsors, being compelled to make certain ERAF payments
or prohibits using tax increment funds as a ―levy‖ or yardstick to measure the size
of those payments — is required. Nor is this result absurd because the plain
language of section 25.5 (a)(7)(A) in article XIII of the California Constitution, as
enacted by Proposition 22, fully encompasses the clearly stated purpose of
Proposition 22 — ―to prohibit the Legislature from requiring, after the taxes have
been allocated to a redevelopment agency, the redevelopment agency to transfer

                                         20
some or all of those taxes to the State, an agency of the State, or a jurisdiction; or
to use some or all of those taxes for the benefit of the State, an agency of the State,
or a jurisdiction.‖ (Prop. 22, § 9.) Proposition 22 succeeds in ensuring that a
redevelopment agency‘s largest source of revenue, the tax increment, cannot be
reallocated by the state.
       Nor does anything in the history of Proposition 22 suggest that its plain
language must be construed to accommodate any hypothesized intention to protect
all conceivable local government revenues or that to hold otherwise would
generate an absurd result. Although uncodified sections of Proposition 22
complain that ―state politicians in Sacramento have seized and borrowed billions
of dollars in local government and transportation funds‖ (Prop. 22, § 2, subd. (c))
and broadly state that ―[t]he purpose of this measure is to conclusively and
completely prohibit state politicians in Sacramento from seizing, diverting,
shifting, borrowing, transferring, suspending, or otherwise taking or interfering
with revenues that are dedicated to funding services provided by local government
or funds dedicated to transportation improvement projects and services‖ (id.,
§ 2.5), the actual express limits that Proposition 22 imposes on the Legislature are
quite discrete.
       In addition to its language protecting tax increment funds, Proposition 22
provides that ―[t]he Legislature may not reallocate, transfer, borrow, appropriate,
restrict the use of, or otherwise use the proceeds of any tax imposed or levied by a
local government solely for the local government‘s purposes.‖ (Cal. Const., art.
XIII, § 24, subd. (b), as added by Prop. 22, Gen. Elec. (Nov. 2, 2010) § 3.) Thus,
Proposition 22 protects local taxes specifically earmarked for local government
purposes. It also prohibits the Legislature from borrowing from certain funds
related to transportation programs, reduces or eliminates the Legislature‘s
authority to change the distribution of state fuel taxes and vehicle license fees, and

                                          21
ends the Legislature‘s ability to order temporary ERAF loans of local property
taxes during state financial hardships. (Prop. 22, §§ 4-7.)
       The majority broadly concludes that Proposition 22 was drafted with the
intent of ending ERAF shifts similar to those that had occurred before, but this
history of Proposition 22 does not allow us to paint with such a broad brush.
Although the majority assumes the drafters of Proposition 22 and the voters who
endorsed it must have intended to preclude the kinds of ERAF shifts that had taken
place since 2003, it is noteworthy that the term ―ERAF‖ appears nowhere in either
the voter guide or the text of the measure itself and that it is only vaguely
referenced as to redevelopment agencies in the Legislative Analyst‘s summary of
Proposition 22. (Voter Information Guide, Gen. Elec. (Nov. 2, 2010) Legis.
Analyst‘s analysis of Prop. 22, p. 33 [―Recently, the state required redevelopment
agencies to shift $2 billion of revenues to schools over two years‖].) Nor was
there any explanation of how the prior ERAF shifts were both revenue and source
neutral. To the extent these materials explicitly refer to state-mandated shifts of
local revenues to schools, the materials were precise as to Proposition 22‘s
intentions — it prevents compelling a redevelopment agency to use its tax
increment funds to make future payments to schools and it ends the state‘s ability
to take loans of local property taxes to make temporary payments to schools in
state fiscal emergencies.
       Proposition 22‘s language and history evince nothing more, yet the
majority somehow concludes that the drafters of Proposition 22 fully informed the
voters that the measure carried the intent of precluding every previously expressed
method of funding the prior ERAF shifts. But what part of Proposition 22, in
either its history or codified its language, informed voters that the measure
intended to also protect ―any funds that are legally available for‖ funding future
ERAF payments? (§ 33692, subd. (c).) By assuming such an intended protection,

                                          22
the majority broadly conflates the circumstances leading to Proposition 22‘s
placement on the ballot with the clear expressed intent of its drafters as
documented in both its history and its codified language.
       Given the specificity with which Proposition 22 expressly curtails the
Legislature‘s ability to seize and/or borrow local government revenue, it is far
more reasonable to conclude that Proposition 22 was narrowly intended to protect
specific local government revenues and not, expansively, to cover ―any funds that
are legally available for‖ funding the Assembly Bill 1X 27 payments. (§ 33692,
subd. (c).) More important, it would be improper to rely upon uncodified sections
of Proposition 22 to support an unspoken intent to preclude the use of any
otherwise available local funds to make the payments required by Assembly Bill
1X 27. (Burden v. Snowden (1992) 2 Cal.4th 556, 562 [―Where the words of the
statute are clear, we may not add to or alter them to accomplish a purpose that
does not appear on the face of the statute or from its legislative history‖].) Indeed,
it would be an absurd result if we interpreted Proposition 22 to protect all
conceivable local revenues in light of its otherwise clear language discretely
isolating specific local revenue sources for protection.
       Finally, I note that, in many ways, the payments described by Assembly
Bill 1X 27 are not inconsistent with Proposition 22‘s expressly stated intent to
prevent ―[s]tate raids of revenues dedicated to funding vital local government
services and transportation improvement projects and services.‖ (Prop. 22, Gen.
Elec. (Nov. 2, 2010) § 2, subd. (b).) The statutes governing Assembly Bill 1X 27
payments for every fiscal year after 2011-2012 provide that the payments are
directed solely toward fire, transit, and school districts within the redevelopment
project area. (§§ 34194, subds. (a), (c), 34194.1, subds. (b), (c), 34194.4,
subds. (a)-(c).) In particular, the portions of Assembly Bill 1X 27 payments used
to fund schools in the redevelopment project area are made in addition to any

                                         23
funding provided to those schools by the state, potentially resulting in more
funding for schools in financially troubled areas. (§ 34194.1, subds. (b), (c).) Far
from being a ―raid‖ of local revenues dedicated to essential government services,
it seems apparent the Legislature had in mind the needs of local communities
when deciding how to best balance the continued benefits of redevelopment.

           D. Petitioners Fail to Show That Assembly Bill 1X 27 Conflicts with
              the Constitution “in the Generality or Great Majority of Cases”
       Even assuming the broadest possible construction of Proposition 22 and
applying the more lenient standard for facial challenges, petitioners have failed to
provide evidence to support a finding that Assembly Bill 1X 27 is
unconstitutional.
       Petitioners provide declarations on behalf of only seven of California‘s 482
incorporated cities and only one of its 58 counties. Given such a small sampling,
even if they all described identical inevitable conflicts between Assembly
Bill 1X 27 and the state Constitution, this evidence would fail to establish a
constitutional violation ― ‗in the generality or great majority of cases.‘ ‖
(Guardianship of Ann S., supra, 45 Cal.4th 1110, 1126.) This showing is
insufficient to establish that Assembly Bill 1X 27 payments must come, either
directly or indirectly, from redevelopment agencies‘ tax increment funds in the
generality or great majority of cases.
       Moreover, the declarations provided by petitioners actually show quite the
opposite. The declaration from the executive director of the California
Redevelopment Association explains that the tax increment funds of most
redevelopment agencies are tied up with existing debt, and that, as a result, ―many
redevelopment agencies will be unable to fund the required [Assembly Bill 1X 27]
payments.‖ The great majority of the other declarants make similar statements
about their respective redevelopment agencies. Only one declarant, Mayor Jean

                                          24
Quan, City of Oakland, unequivocally states that her city ―can make the Assembly
Bill1X 27 payment by utilizing its current property tax increment [funds] and all
of its remaining reserves. . . .‖ If these declarations are accepted as true, then they
suggest that neither community sponsors nor most redevelopment agencies will
actually be compelled to use their tax increments funds to make the Assembly Bill
1X 27 payments and there is no violation of Proposition 22.
       Thus, petitioners‘ own evidence defeats the very notion that Assembly
Bill 1X 27 will compel a violation of Proposition 22 in the generality or great
majority of cases. Given this lack of evidence, the best we can conclude is that it
could be possible that the statutes enacted by Assembly Bill 1X 27 might cause
some redevelopment agencies to waive their constitutional protections as they
relate to tax increment funds. But such speculation on a facial challenge cannot
render legislation unconstitutional.
       This evidentiary failure is unsurprising given that counsel for petitioner
California Redevelopment Association candidly admitted at oral argument that his
clients‘ worst case scenario would be a world where Assembly Bill 1X 26 is found
constitutional and Assembly Bill 1X 27 is not. Implicit in that admission is the
recognition that an overly broad interpretation of Proposition 22‘s protections
would forever place petitioners‘ largest and most critical revenue source, tax
increment financing, under lock and key. Given that we agree that, under
Assembly Bill 1X 26, redevelopment agencies can be dismantled and their
previously allocated tax increment revenue can be redistributed, how can they now
ever be reconstituted and refinanced unless Assembly Bill 1X 26 itself is wholly
reversed? The irony of these circumstances concerning Proposition 22 should not
be ignored — the very measure that was crafted to protect financing for new
redevelopment projects has been broadly interpreted in a manner that effectively

                                          25
ends all financing for new redevelopment projects. This cannot be a necessary
result intended by the proponents of Proposition 22 concerning redevelopment.

                                 III.   Conclusion
       Given the procedural posture of this case, the rules of statutory and
constitutional construction, and the nature of petitioners‘ burden of proof, I believe
we cannot declare Assembly Bill 1X 27 unconstitutional in the manner articulated
by the majority.
       Although the system of redevelopment in this state has been far from
perfect, it certainly is worth noting redevelopment projects like the restored Public
Market Building in downtown Sacramento, the Bunker Hill project in downtown
Los Angeles, Horton Plaza and the Gaslamp Quarter in downtown San Diego, HP
Pavilion in San Jose, and Yerba Buena Gardens in downtown San Francisco.
When faithfully administered and thoughtfully invested in the interests of the
community, a redevelopment agency can successfully create jobs, encourage
private investment, build local businesses, reduce crime and improve a
community‘s public works and infrastructure.
       A close reading of Assembly Bill 1X 27 indicates that the Legislature
sought to preserve these benefits by carefully attempting to craft legislation that
did not run afoul of our state Constitution. As noted earlier (see ante, pp. 23-24),
it even sought to redress some of the inequity the prior system had created by
funneling additional money into schools and fire and transit districts within each
redevelopment project area. (§§ 34194, subds. (a), (c), 34194.1, subds. (b), (c),
34194.4, subds. (a)-(c).) In advocating for the constitutionality of Assembly Bill
1X 27, the California Teachers Association and the state‘s largest school district,
Los Angeles Unified School District, both point out that Assembly Bill 1X 27
would provide schools with an additional $340 million per year, beginning with

                                         26
every fiscal year following 2011-2012. But today, the Legislature‘s attempt to
balance the benefits of continued redevelopment with the need to fund vital local
government services has apparently failed with little or no alternative to continued
redevelopment available.
       For the reasons set forth above, I conclude that petitioners fail to establish
that Assembly Bill 1X 27 is unconstitutional on its face.

                                                  CANTIL-SAKAUYE, C. J.

                                          27
See last page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion California Redevelopment Association v. Matosantos
__________________________________________________________________________________

Unpublished Opinion
Original Appeal
Original Proceeding XXX
Review Granted
Rehearing Granted

__________________________________________________________________________________

Opinion No. S194861
Date Filed: December 29, 2011
__________________________________________________________________________________

Court:
County:
Judge:

__________________________________________________________________________________

Counsel:

Howard Rice Nemerovski Canady Falk & Rabkin, Steven L. Mayer and Emily H. Wood for Petitioners.

Richards, Watson & Gershon, Sayre Weaver, Steven R. Orr, Toussaint S. Bailey and Andrew J. Brady for
the Association of Bay Area Governments and Various California Cities and Redevelopment Agencies as
Amici Curiae on behalf of Petitioners.

Carmen A. Trutanich, City Attorney (Los Angeles), Kelly Martin, Assistant City Attorney; Kane, Ballmer
& Berkman, Murray O. Kane, Susan Y. Cola and Donald P. Johnson for Community Redevelopment
Agency of the City of Los Angeles, Southern California Association of Non-Profit Housing and Betty Yee
as Amici Curiae on behalf of Petitioners.

Rutan & Tucker, William M. Marticorena, Philip D. Kohn, Jeffrey T. Melching, Bill Ihrke and Jennifer
Farrell for City of Irvine as Amicus Curiae on behalf of Petitioners.

Rutan & Tucker, Jeffrey M. Oderman, Dan Slater, Mark J. Austin, Bill Ihrke and Megan K. Garibaldi for
City of Cerritos, Cerritos Redevelopment Agency, City of Carson, Carson Redevelopment Agency, City of
Commerce, Commerce Community Development Commission, City of Cypress, Cypress Redevelopment
Agency, City of Downey, Community Development Commission of the City of Downing, City of
Lakewood, Lakewood Redevelopment Agency, City of Paramount, Paramount Redevelopment Agency,
City of Placentia, Redevelopment Agency of the City of Placentia, City of Santa Fe Springs, Community
Development Commission of the City of Santa Fe Springs, City of Signal Hill, Signal Hill Redevelopment
Agency, Cuesta Villas Housing Corporation and Bruce W. Barrows as Amici Curiae on behalf of
Petitioners.

Wallin, Kress, Reisman & Kranitz, Peter J. Wallin; Law Offices of Robert V. Wadden, Jr., and Robert V.
Wadden, Jr., for Long Beach Central, West and North Project Area Committees as Amici Curiae on behalf
of Petitioners.
Page 2 – S194861 – counsel continued

Counsel:

Michael W. Rawson, Deborah Collins, Craig Castellanet, Roland Chang, Ilene J. Jacobs, Mona Tawatao,
Shashi Hanuman, Remy De La Peza, Richard Rothschild and S. Lynn Martinez for the Public Interest Law
Project, California Rural Legal Assistance, Inc., Legal Services of Northern California, Public Counsel and
Western Center on Law & Poverty as Amici Curiae on behalf of Petitioners.

Pamela J. Walls, County Counsel, and Anita C. Willis, Deputy County Counsel, for County of Riverside as
Amicus Curiae on behalf of Petitioners.

Jean-Rene Basel, County Counsel, and Michelle D. Blakemore, Chief Assistant County Counsel, for
County of San Bernardino as Amicus Curiae on behalf of Petitioners.

Woodruff, Spradlin & Smart, M. Lois Bobak and Thomas F. Nixon for Association of California Cities-
Orange County as Amici Curiae on behalf of Petitioners.

Kamala D. Harris, Attorney General, Manuel M. Medeiros, State Solicitor General, Douglas J. Woods,
Assistant Attorney General, Peter A. Krause, Seth E. Goldstein and Ross C. Moody, Deputy Attorneys
General, for Respondents Ana Matosantos, as Director of the California Department of Finance, and State
Controller John Chiang.

Miguel Márquez, County Counsel, Orry P. Lorb, Assistant County Counsel, Lizanne Reynolds and James
R. Williams, Deputy County Counsel, for Respondents Vinod K. Sharma, Auditor-Controller of the County
of Santa Clara and the County of Santa Clara.

Miguel Márquez, County Counsel (Santa Clara), Lori E. Pegg, Assistant County Counsel, Lizanne
Reynolds and James R. Williams, Deputy County Counsel, for Santa Clara Unified School District as
Amicus Curiae on behalf of Respondents.

Remcho, Johansen & Purcell, Karen Getman and Margaret R. Prinzing for California‘s Teachers
Association as Amicus Curiae on behalf of Respondents.

Catherine A. Rodman for Affordable Housing Advocates as Amicus Curiae on behalf of Respondents.

Bell, McAndrews & Hiltachk, Thomas Hiltachk and Ashlee N. Titus for California Professional
Firefighters as Amicus Curiae on behalf of Respondents.

Law Office of Christopher Sutton and Christopher Sutton for Municipal Officials for Redevelopment
Reform and Assembly Member Chris Norby as Amici Curiae on behalf of Respondents.

David Holmquist, John F. Walsh; Strumwasser & Woocher, Gregory G. Luke, Byron F. Kahr; and Abe
Hajela for Los Angeles Unified School District and California School Board Association as Amici Curiae
on behalf of Respondents.

John C. Eastman, Anthony T. Caso and Karen J. Lugo for Center for Constitutional Jurisprudence and
California Alliance to Protect Private Property Rights as Amici Curiae.
Counsel who argued in Supreme Court (not intended for publication with opinion):

Steven L. Mayer
Howard Rice Nemerovski Canady Falk & Rabkin
Three Embarcadero Center, 7th Floor
San Francisco, CA 94111-4024
(415) 434-1600

Ross C. Moody
Deputy Attorney General
455 Golden Gate Avenue, Suite 11000
San Francisco, CA 94102-7004
(415) 703-1376

James R. Williams
Deputy County Counsel
70 West Hedding Street, East Wing, 9th Floor
San Jose, CA 95110
(408) 299-5900