California Supreme Court to Review New Redevelopment Legislation

The California Supreme Court has granted review on a petition by the California Redevelopment Association, challenging the constitutionality of the recent legislative budget compromise whereby redevelopment agencies would not be abolished, provided they share their revenues with the state. Thus, earlier this week, Los Angeles has agreed to fork over $97 million to the state in order to keep its redevelopent agency in business. See David Zahniser, Los Angeles’ Redevelopment Agency Still Alive After Budget Deal, L.A. Times, August 11, 2011.

The state Supreme Court also issued a stay order, freezing enforcement of the legislation’s provisions, pending a court decision on the merits. So stay tuned. It shouldn’t be too long a wait, since the court also ordered expedited briefing.

The redevelopment agencies are arguing that under Proposition 22, passed by the voters in 2010, local funds may not be allocated to the state, so the allocation requirement is unconstitutional. However, the legislation under review provides that redevelopment agencies are not required to comply with the allocation requirement. But if they do not, they will be abolished.  Moreover, since redevelopment agencies are creatures of statute, it is not obvious why the legislature that created them cannot abolish them as well.

Finally, if the court sides with the redevelopment agencies, that will create another deficit hole in California’s already Mickey-Mouse state budget.

So stay tuned.

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