High Court Upholds Closure of Redevelopment Agencies

On Thursday, the California Supreme Court upheld a new state law to eradicate the Los Angeles Community Redevelopment Agency and hundreds of similar agencies across the state, but ruled that a companion law forcing redevelopment agencies to give a portion of their tax revenues to the state was unconstitutional.

The court ruling aborted the plan to allow local governments to buy back into redevelopment and the agencies will be phased out when their contracted projects are completed.

The agencies not only fund major building projects, like a proposed a new art museum, apartments and park in downtown Los Angeles and a proposed football stadium in downtown San Diego, but they also spend 20 percent of their income on affordable housing.

“It is unfortunate the Supreme Court allowed the legislature to remove such a valuable resource for our local cities,” said California Assemblyman Curt Hagman. “The cities in my counties used redevelopment funds to clean up Mission Blvd in Montclair, Revitalize Uptown Whittier and many projects that have created jobs and restored blighted areas.”

The court was unanimous in its opinion that the state had the right to dissolve redevelopment agencies "when the Legislature deems it necessary and proper.''

However, six of the court's seven justices agreed that Proposition 22, passed by voters in March, forbids the state from forcing municipal agencies to transfer money to the state, and ruled the law invalid.

Chief Justice Tani Cantil-Sakauye dissented on that point, saying that the law does not "compel'' community redevelopment agencies to violate Proposition 22.

Redevelopment agencies are funded by the increase in tax revenues generated by projects in their areas. The agencies use the revenue to invest in additional projects mainly in blighted parts of cities.

Supporters of the agencies argue they are the best economic development tool and catalyze redevelopment projects that private investors would otherwise not build.

Gov. Jerry Brown has said the money would be better used to fund schools and other municipal functions during tight budgetary times. Opponents of the agencies cite a state analyst's report that shows the cost of redevelopment growing without any tangible economic benefit to the state. 

--with reports from City News Service