Update: Redevelopment Agencies in Jeopardy Under Supreme Court Ruling (With Poll)

What Glendora city officials have called “a worst case scenario” in the fight against the shutdown of redevelopment agencies may have transpired, as the Supreme Court decided Thursday morning that the state has a right to seize more than $1 billion in redevelopment agency funds, putting about 400 redevelopment agencies in jeopardy.

In the case CRA v. Matosantos, the justices also struck down a separate law that would have allowed redevelopment agencies to fund local projects if they paid a portion of tax revenue to the state.

Earlier this year, the Legislature passed two laws – ABXI26, which allowed for the complete closure of redevelopment agencies and ABXI27, which would allow redevelopment agencies to function if they paid the tax revenue portion.

The Glendora City Council passed a resolution in , although they referred to it as paying “a ransom” to gain access to money they believed was rightfully the city’s.

Supporters of redevelopment agencies have said that earlier rulings were in violation of the voter approved Proposition 22. in the fight to save redevelopment funds.

On Jan. 15, 2012, half of redevelopment funds are expected to be turned over to the state for the 2011-2012 fiscal year.

Glendora passed a resolution in January of this year to, but the state may still have access to those funds.

The ruling will force city officials and the community to find alternative means to fund local projects originally funded through its community redevelopment agency.

“We will be gathering the team around and seeing what the options are in developing something,” said City Manager Chris Jeffers. “Certainly we’re going to do a well thought out plan, we’re not going to rush into knee jerk reaction.”

He pointed to tapping into city reserve money to help buy some time for the city to come up with an alternative plan.

But Jeffers said he did not believe a ruling against redevelopment agencies would completely abolish them.

“I also believe the state will have some buyer’s remorse and they will realize that this may not be what they want,” said Jeffers. “…in theory, if the Legislature cannot do redevelopment agencies, they can create a ‘son of redevelopment agency,’ a new entity that could keep us going.

“In the end, they get their money, and really, this is all about -- money,” said Jeffers. “They’re in a bind and they’re just looking for every nickel and dime in the seat cushion.”

Senate President Pro Tem Darrell Steinberg, Assembly Speaker John Perez, along with many other lawmakers, said the legislative vote was intended only to extract revenues from redevelopment agencies, not abolish them altogether.  As the Legislature debated the two bills, Senator Steinberg said “[T]his bill is the fair and right choice because it does not in fact eliminate redevelopment but it reduces its size.”

In a written statement, the CRA and League of California Cities vowed to continue the fight to save redevelopment and called for their own special legislation that would re-establish redevelopment in California.

"Without immediate legislative action to fix this adverse decision, this ruling is a tremendous blow to local job creation and economic advancement," wrote CRA Board President Julio Fuentes in the statement. "The legislative record is abundantly clear that legislators did not intend to abolish redevelopment. We hope to work with state lawmakers to come up with a way to restore redevelopment."