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Redevelopment fight heads to state Supreme Court

California’s redevelopment agencies are taking their fight for survival directly to the California Supreme Court, saying Gov. Brown and the Legislature ignored the voters’ will and violated the constitution by dismantling potentially hundreds of local agencies.

The legal action – the third major court fight in three years over billions of dollars in redevelopment money – is expected to be launched as early as this week.

The agencies’ allegation is not new, but the strategy is.

The lawsuit will seek the high court’s “original jurisdiction” to resolve the dispute, said Chris McKenzie, executive director of the League of California Cities.

“The voters, by overwhelmingly approving Proposition 22 just seven months ago, explicitly prohibited what the governor and Legislature have just agreed to do. They conclusively and completely barred the state from diverting redevelopment money.”

“They tried to write the bills to prevent this (going to the high court, but it is unconstitutional to tie the hands of the state Supreme Court,” he added. “They even have gone so far as to allow the filing of the suit only in Sacramento Superior Court. That is only one piece of the minutiae that is in those bills.”

On Wednesday, Brown announced that he had signed the two-bill, special-session package abolishing the dismantling the agencies. His signature on the bills triggers the lawsuit, which is likely to be filed by the end of the week, the League of California Cities says.

Brown’s decision strips some 398 redevelopment agencies of their funding – in effect, abolish them – across California and use their money, some $1.7 billion the first year and $400 million annually in subsequent years, for education, social services and o0ther programs.

The agencies are creatures of the cities, taking a portion of the money from local property taxes – typically, about 15 percent – and using the money to eliminate blight and stimulate economic growth.

The administration says the new plan takes the agencies’ funding but allows some to continue if they relinquish some future money. The agencies and their allies have adamantly opposed the governor’s proposal and say by halting the funding they are, in effect, killing the agencies.

In response to a questionnaire, officials at 50 cities across California say their local redevelopment agencies would be forced to close down and many others are likely to follow suit, according to the League.

Currently, the redevelopment agencies collect about $5 billion annually.

Cities have vigorously defended the agencies, although a number of critics contend the money has been used for purposes that have little to do with blight, such as paying for the salaries of public officials and building high-end projects such as golf courses and swank restaurants.

The critics of redevelopment – critics that include Brown, a former mayor of Oakland – believe the money could be better spent in tight economic times when the state’s unemployment remains in double digits and recovery from the recession still looks bleak.

The latest legal fight over redevelopment is not unique: The League has gone to court twice before on the issue.

Three years ago, it prevailed in a decision by Sacramento Superior Court Judge Lloyd Connelly that the Schwarzenegger improperly sought to tap the agencies’ money. The following year, the same judge upheld an attempt by the administration to capture $2.05 billion in redevelopment, payable to the state in two installments. The decision currently is under appeal.

The third lawsuit would bypass the lower courts and go directly to the state Supreme Court.

The new budget followed months of negotiations over redevelopment.

In March, the redevelopment agencies offered a counter to the governor’s plan, saying their option did not violate Proposition 22 and did not rely in borrowing, an issue that had been raised by state Treasurer Bill Lockyer. The agencies’ proposal would have allowed the agencies to remain in existence while contributing money to schools and other programs.

The agencies that participate in the voluntary program would contribute up to 10 percent of their tax-based revenues to local school districts over the next decade starting this year, a move that would shift $2.7 billion to schools, according to John Shirey, head of the California Redevelopment Association.

The governor’s office, which rejected the agencies’ compromise offer, said at the time that the CRA plan would “shortchange schools, public safety and other core taxpayer needs by $12 billion over 10 years.” 

A proposal offered by L.A. Mayor Antonio Villaraigosa and other big-city mayors, required borrowing, and also was rejected by the governor.

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