California Supreme Court set to rule on redevelopment money

The California Supreme Court will issue a long-awaited ruling Thursday on the legality of the state's move to grab $1.7 billion in redevelopment money to help close California's budget shortfall -- a move that rocked cities around the Bay Area and across the state.

The ruling, expected at 10 a.m., should give critical guidance on two state laws: one that dissolves redevelopment agencies and redirects their property tax revenues to the state, and a second that allows agencies to stay afloat if they agree to relinquish a large portion of their funding, which will be used to pay for schools.

San Jose's agency, until recently the state's second largest and the architect of the city's downtown renewal, said it could not afford the payment for schools and would close shop. But most others in the state -- including Oakland, San Francisco, Walnut Creek and Concord -- are hoping to pay the money and survive. Oakland, for instance, would like to use redevelopment money in its bid to retain the A's baseball team, which San Jose is trying to land.

The state's high court promised a 10 a.m. ruling on its website Wednesday. The Supreme Court previously had agreed to rule on the crucial issue by Jan. 15, when half of the redevelopment money is slated to be turned over to the state for the 2011-12 fiscal year.

Redevelopment agencies, joined by the cities of San Jose and Union City, challenged the budget move earlier this year in a lawsuit, arguing that

it violates the terms of voter-approved Proposition 22, a measure designed to bar the state from seizing local funding, including redevelopment money, to pay its bills. Redevelopment advocates maintain the budget gambit is unconstitutional, while state lawmakers and the governor insist the Legislature has ultimate authority over redevelopment funding.

During arguments in November, the seven-member Supreme Court sent mixed signals on how it may rule in the case.

But the stakes are high for California's already shaky budget outlook and the fate of the state's nearly 400 redevelopment agencies.

Contact Howard Mintz at 408-286-0236.

Source: http://www.sgvtribune.com/news/ci_19632057?source=rss

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