SAN FRANCISCO – California’s redevelopment agencies won an early battle to stay alive after the state Supreme Court granted a stay Thursday against implementing new laws that would force them to pay or face elimination.
However, the court did not issue a stay on the portion of the new laws that prevent redevelopment agencies from taking on new debt. The high court agreed to hear the case, directly bypassing lower court hearings.
“We’re glad they took the case, we’re glad they issued a stay, and we’re glad they are going to expedite it,” said the plaintiffs’ attorney, Steven Mayer with Howard Rice Nemerovski Canady Falk & Rabkin. “We feel quite good.”
The court hopes to come to a decision before Jan. 15, 2012, according to case filings.
The California Redevelopment Association and the League of California Cities, along with San Jose and Union City, filed a suit at the end of July in state Supreme Court, calling the new laws unconstitutional.
The defendants in the suit include state finance director Ana Matosantos, Controller John Chiang, and Patrick O’Connell, auditor-controller of Alameda County and a representative of county auditor-controllers.
The state’s approximately 400 redevelopment agencies are facing new laws signed by Gov. Jerry Brown along with this year’s budget that force them to either pony up an estimated $2.1 billion over the next two years to schools and special districts or be eliminated.
The Redevelopment Association estimates roughly 20% of RDAs will be stamped out if the new legislation is put in place, and the rest will be much poorer.
In the 126-page suit, the plaintiffs pointed to Proposition 22, a ballot measure passed in 2010 they said prohibits state politicians from taking or interfering with revenue dedicated to local governments.
The suit asked the court to grant a temporary stay by Aug. 15 to prevent the implementation of the new laws while the case is ongoing.
The 399 active RDAs have $20.6 billion of tax-allocation bonds outstanding, while total indebtedness is $87.5 billion, according to the CRA.
