High Court Allows State to Dissolve Redevelopment Agencies, Seize $1.7 Billion

SAN FRANCISCO (Bay City News Service)--The California Supreme Court today upheld a law that dissolves the state's 400 redevelopment agencies and allows the state to seize $1.7 billion in property tax revenue to fund schools and special districts.

But the court struck down a second law that would have enabled the agencies to come back into existence if they agreed to contribute $400 million annually in future years to schools, transit and firefighting programs. The panel said the second measure violated a 2010 voter initiative that barred the state from diverting property tax revenues from redevelopment agencies.

Justice Kathryn Werdegar wrote that the Legislature had the power to terminate the agencies, but did not have the authority to require mandatory payments as a condition of future existence.

Both laws were enacted by the Legislature and signed by Gov. Jerry Brown in June as steps to help close the state's $25 billion budget deficit. The state high court issued its ruling in San Francisco in a lawsuit filed by the California Redevelopment Association, League of California Cities and the cities of San Jose and Union City.

Piedmont does not have a redevelopment agency, so the rulings are not expected to have a direct impact on the city's finances.

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