Per our Sacramento Bureau Chief, John Myers:

In July, the California Redevelopment Association, the League of California Cities, and the cities of San Jose and Union City sued the state over its plan to redistribute billions of dollars in redevelopment funds into state coffers.

As our Sacramento Bureau Chief John Myers explained at the time, “the budget offered the 400 redevelopment agencies (RDAs) across California a choice: close up shop or begin handing over a portion of RDA-earmarked property tax dollars. Needless to say, local officials didn’t see that as much of a choice, and generally used terms akin to a violent hostage scenario.”

When the case was heard by the court last month, Myers explained the legal issues involved — and the stakes — in a Capital Notes blog post:

The crux of the legal fight…seems to be who controls the fate of local redevelopment agencies: legislators or voters?

And even then, is that fate a zero sum game — that is, must the agencies continue to exist exactly as they are now? Or not at all?

The 70-minute courtroom debate in California Redevelopment Association v. Matosantos rekindled much of the four month fight over the budget and its action to abolish and then resurrect — with conditions — some 400 local redevelopment agencies (RDAs) across the state.

The stakes are high. For the state, losing the case means another $1.7 billion in budget red ink (and that, on top of additional deficit pressures announced elsewhere today). For RDAs, it’s either a new revenue sharing system… or total elimination.

The back-and-forth in the San Francisco courtroom seemed to hint that the justices are grappling less with whether the Legislature has the power to abolish RDAs — a power that the Court seems poised to uphold — and more with whether the budget provisions that dissolve and then reconstitute RDAs are, as the attorney for the locals argued, “joined at the hip.”

And that’s not a small issue, especially for redevelopment officials. If the two budget provisions (ABx26 and ABx27) can be separated, then redevelopment supporters face the very real possibility that only ABx26, the abolishment bill, survives. That would mean RDAs across the state must close up shop for good.

“The redevelopment agencies took a gamble on this lawsuit,” said Ross Moody, the deputy state attorney general representing Governor Brown’s budget director. “They could’ve just accepted…the new fiscal reality that we’re all living in.”

…[I]t’s going to be a Pyrrhic victory for redevelopment agencies if they only convince the Supreme Court that the Legislature’s power is limited to their existence. And that’s why the case is so focused on whether the two bills (abolishing agencies, resurrecting them with new revenue-sharing rules) are inseparable. Or not.

Read the full post, or listen to the story on The California Report below:

Fate of Revelopment Agencies Could be Decided in California Supreme Court Decision Tomorrow 28 December,2011Jon Brooks

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