State Gives Up Appeal on Fund Raid

Meet the new California redevelopment litigation, almost the same as the old California redevelopment litigation.

The California state government has abandoned its appeal of a trial court’s ruling that a state budget shift of $350 million away from local redevelopment agencies was illegal, the California Redevelopment Association announced Monday.

But the umbrella organization for local redevelopment agencies is gearing up to challenge an even larger shift approved in the state’s fiscal 2010 budget, which moves $2.05 billion out of redevelopment accounts over the next two years.

“One down, one to go,” CRA executive director John Shirey said in a statement. “While we’re pleased that the state dropped the appeal of the 2008 state raid, we must head right back to court to block an even more drastic raid this year.”

In April, Superior Court Judge Lloyd Connelly ruled that the fund shift lawmakers approved in 2008 was unconstitutional, and prohibited California from forcing county auditors to divert the money from the redevelopment agencies.

Grappling with a massive budget deficit, state lawmakers this July adopted revisions to the fiscal 2010 budget that include the new shift of $2.05 billion away from redevelopment agencies to boost the state general fund.

The language in the most recent legislation is different from that of the earlier fund shift, in an attempt to address the issues raised in Connolly’s April ruling.

But Shirey says the new shift, like the old one, simply redirects redevelopment funds to pay off state obligations, and therefore violates California’s constitution.

He said the next lawsuit will be filed shortly, also in Sacramento Superior Court, with the hope that a Superior Court ruling will come by May, when the first payments from redevelopment agencies are due.

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