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Court agrees to hear redevelopment case, issues temporary stay

California Supreme Court building, San Francisco

The future of state redevelopment agencies is in the hands of the courts now, but in the meantime, a partial stay has been issued giving those agencies a reprieve from making required payments to the state to keep redevelopment going.

The California Supreme Court agreed to hear a petition filed in July challenging the constitutionality of recent legislation eliminating redevelopment agencies unless they pay the state to continue operating, it was announced Thursday.

The announcement comes on the heels of a new Sacramento city ordinance establishing an agreement to make the required payments to the state to maintain redevelopment activity. The ordinance states, however, that the payments would be made “under protest” until the Supreme Court case is resolved.

AB1x26 and AB1x27, the two state bills under fire in the courts, were passed as part of the budget process. If the bills survive the court challenge, it is anticipated they will save the state $1.7 billion in spending obligations for K-12 education.

If the legislation is ruled unconstitutional, however, the state would not receive those funds from cities, and the state budget would be immediately impacted.

Chris McKenzie, executive director for the League of California Cities, said in a press release Thursday that the league is pleased the court has accepted the case and is moving it forward on an expedited basis.

“The redevelopment bills are unconstitutional,” McKenzie said in the statement. “We look forward to presenting our case to the Court very soon. We’re confident the State Supreme Court will ultimately strike down this unconstitutional legislation that ignores the voters’ will and that will destroy local economies.”

The primary plaintiffs in the case, the League of California Cities and the California Redevelopment Association, filed the petition on the grounds that the legislation violates a November 2010 proposition (Prop 22) prohibiting the state from “borrowing or taking” funds used for redevelopment or local government projects and services.

If the court allows AB1x26 and AB1x27 to stand, redevelopment agencies throughout the state will be faced with the possibility of being dissolved if the cities and counties they serve cannot afford to pay the state to keep them going.

According to the press release, the court established a briefing schedule to hear arguments on the case as soon as possible.

A final decision from the court is expected before Jan. 15, 2012, the date when redevelopment agencies are required to make their first payment.

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