The California Supreme Court upheld a new state law Thursday abolishing hundreds of community redevelopment agencies across the state, but ruled that a companion law forcing CRAs to give a portion of their tax revenues to the state was unconstitutional.
"Anytime Sacramento can take your local money, they're all for it," Fountain Valley City Council member Larry Crandall said. "That's unfortunate for the residents of FV. It's very unfortunate for the residents of California; it's very unfortunate for the residents of Fountain Valley. All the information we've had from local sources as well as county and regional and up through the state is that it's probably a wrong decision. But what are you going to do about it? It's the California Supreme Court."
The ruling is a major blow to redevelopment agencies, which sued earlier
this year to block both laws. Since the court ruling aborted the plan to
allow local governments to buy back into redevelopment, the agencies will be
phased out when their contracted projects are completed.
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.
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.
The Fountain Valley City Council voted in August to participate in the now-invalid state program, but did so relatively unwillingly, calling the required remittance a "ransom," and holding out hope that the high court might rule in favor of maintaining redevelopment agencies.
-- City News Service contributed to this report.