After yesterday's California Supreme Court oral argument in California Redevelopment Association vs. Matosantos – the lawsuit challenging the state's new pay-ransom-or-die redevelopment system – it's still hard to tell where the court will go. But the biggest question that emerged was: What happens it the court upholds AB 1x 26, which abolishes redevelopment, but strikes down AB 1x 27, which permits redevelopment agencies to continue to exist if they pay a "remittance" to the state?

Attorney General Kamala Harris took the unusual measure of pre-emptively voicing her official opposition to the lawsuit that was filed two weeks ago to overturn the budget bills that force redevelopment agencies to either disband or pay a total of $1.7 billion in "remittances" to the state. The suit was filed by the California Redevelopment Association and the League of California Cities in the state Supreme Court; the petition calls on the court to declare the actions unconstitutional in light of Prop. 22.

Here we go again. 

In 2009 the redevelopment agencies of California, represented by the California Redevelopment Association, filed suit to block the state's requisitioning of over $1 billion of tax increment financing. That suit failed. 

After six months of debating and negotiating, Governor Jerry Brown today signed AB 1x 26/27, the pair of bills that would compel redevelopment agencies to make voluntary contributions to the state or else face elimination. Opponents of the budget trailer bill contend that the requested contributions would be so burdensome--totaling $1.7 billion this fiscal year--as to effectively end redevelopment in the state by putting all but the most financially solvent agencies out of business.  

Update: Late this morning, Gov. Jerry Brown vetoed the budget package that the Legislature sent him yesterday. Brown said that the budget was imbalanced and that the legislation "contains legally questionable maneuvers, costly borrowing and unrealistic savings." Brown reportedly wants to hold out and force a popular vote on tax extensions that he considers critical to overcoming the state's remaining multi-billion dollar deficit. He did not mention redevelopment in his veto statement.  

While the Legislature remains deadlocked on Gov. Jerry Brown's budget proposal, it seems that what does not kill redevelopment may in fact make it stronger. Many observers had written the obituary for the state's redevelopment system back in March when Brown was insisting that the state had to recoup redevelopment's tax increment in order to help plug its $24 billion deficit.

 As expected, supporters of redevelopment in California wasted no time responding to a scathing report released today by State Controller John Chiang. This afternoon California Redevelopment Association re-iterated its longstanding contention that redevelopment creates jobs, stokes local economies, and provides a net economic benefit to the state despite what Gov. Jerry Brown claims is a $1.7 billion annual drain on state coffers. 

For many cities, redevelopment relies on public-private partnerships, innovative financing, and design integrated with existing surroundings which, in turn, often support the hot topics of smart growth, transit-oriented development, and climate change adaptation.