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Supreme Court Agrees to Hear Redevelopment Case, Issues Stay of Payments

California's redevelopment agencies have won a minor, but far from permanent victory, in their effort to shield a total of $1.7 billion in tax increment funds from the state. 

The Supreme Court of California today agreed to hear California Redevelopment Assn. v. Matosantos (S194861), which was filed to undo a pair of budget bills that could decimate many of the state's nearly 400 redevelopment agencies. The court pledged to reach a decision by January 15. 

The court also issued a stay of the dissolution of redevelopment agencies and remittance payments mandated by Assembly Bill 26 X1 and Assembly Bill 27 X1. The stay comes at the request of the California Redevelopment Assocation and League of California Cities, which two weeks ago filed a petition for the court to throw out both laws. The laws would effectively force redevelopment agencies to shut down or to make voluntary payments to the state in order to remain in business.

Agencies across the state have been deciding whether to make the payments or not, with most having to go to their respective city councils for approval. Technically, AB 27 X1 calls for payments to come from agencies' parent jurisditions, not from the agencies themselves. 

The stay, in effect, prevents redevelopment agencies from being forced to make the payments until the Court rules on the merits of the case. The court did not, however, extend at stay to the provision of the AB 26 X1 that puts a freeze on redevelopment activities prior to dissolution.  

"We're very gratified that the California Supreme Court has agreed to take our case, issued the stay we requested to preserve the status quo, and that it is moving forward on an expedited basis," said Chris McKenzie, executive director, League of California Cities, in a statement.

Today's ruling calls on the respondents, which include the State Departments of Finance and the State Controller's Office, to show cause for why the stay should not be granted. They are required to file a return by Sept. 9. 

The court outlined the upcoming schedule in the case: 

  • A reply may be served and filed by petitioners on or before Sept. 24.
  • Any application to file an amicus curiae brief, accompanied by the proposed brief, may be served and filed on or before Sept. 30.
  • Any reply to an amicus brief may be served and filed on or before Oct. 7.
  • The court does not contemplate extending any time set out above.  The briefing schedule is designed to facilitate oral argument as early as possible in 2011, and a decision before January 15, 2012.

Justices Cantil-Sakauye, Baxter, Werdegar, Chin and Corrigan voted in favor of the stay. Kennard, J., is of the opinion a stay should not be issued.

-Josh Stephens