Redevelopment projects in downtown Lincoln will “be curtailed” due to a ruling by the California Supreme Court last month.

The dissolution of Lincoln’s Redevelopment Agency, Mayor Spencer Short said last week, “means that we are going to be curtailing a lot of our downtown plans for lack of funding.”

City Council voted Aug. 9 to pay the state of California $780,333 to maintain control over Lincoln’s Redevelopment Agency, according to previous News Messenger reports.

Short said that the city will no longer pay that money, due to the Supreme Court’s ruling.

The ruling said the legislature could call for the dissolution of redevelopment agencies across the state but cannot ask cities and counties to make payments to keep their agencies.

“When you have an RDA (redevelopment agency), what happens is within that area, payments to schools and counties are curtailed and the city gets money in the RDA to try to improve the community and try to remove blight,” Short said.

Redevelopment agencies work to remove blight and can result in “an improved tax base,” according to Short.

Last month’s ruling by the Supreme Court was in response to a lawsuit filed last year by the California Redevelopment Association, the League of California Cities and “other affected parties.”

Those filing the lawsuit said Assembly Bills 26 and 27 were unconstitutional, according to court documents.

Both assembly bills were passed by legislature on June 29, 2011.

Assembly Bill 26 “bars redevelopment agencies from engaging in new business and provides for their windup and dissolution.” Assembly Bill 27 says “redevelopment agencies can continue to operate if the cities and counties that created them agree to make payments into funds benefiting the state’s schools and special districts,” according to court documents.

The California Supreme Court ruled that Assembly Bill 26 “is a proper exercise of the legislative power” and Assembly Bill 27 is “invalid in its entirety.”

A successor agency for the redevelopment agency, which is the city of Lincoln, must be in place by Feb. 1, according to Amanda Norton, Lincoln’s housing and special projects coordinator.

Short said the successor agency “liquidates all of the assets the agency has.”

There will also be an oversight board for the successor agency, according to Lincoln Assistant City Manager/Chief Financial Officer Anna Jatczak. The board will include one representative from the city and county, and two representatives from the Western Placer Unified School District.

The agency has made low-interest loans to a number of businesses and property owners in Lincoln, according to Norton.

That includes a $4.6 million loan to the property owner of Lincoln Brand Feeds in 2003 for rehabilitation of the building “resulting in the successful tenanting of the building with four restaurant tenants, five retail tenants and office space.”

The agency has also provided loans for four apartment complexes, including Lincoln Terrace Apartments in 2003 and Golden Village Apartments in 2008, and two restaurants, including Buonarotti Ristorante in 2003, according to Norton.

Short said the city is “fearful” that the oversight agency “could call the loans due now.”

The Redevelopment Agency’s 2011-2012 operating budget is $385,800, Jatczak said.

Since there are “no employees funded out of the Redevelopment Agency,” no jobs will be lost as a result of the agency’s dissolution, according to Norton.

“The agency decided to not pursue any new projects until the lawsuit was heard for the last state take of redevelopment funds,” Norton said. “While the agency doesn’t have any current projects in the works, funding could have been used to help with the downtown portion of the Lincoln Boulevard project.”