Suit asks state Supreme Court to overturn state action targeting redevelopment agencies

A group representing Los Angeles and other cities asked the state Supreme Court on Monday to overturn action by Gov. Jerry Brown and the Legislature that will dissolve redevelopment agencies in California unless they pay the state $1.7 billion.

The lawsuit filed by the League of California Cities and the California Redevelopment Assn. alleges that the state action, taken to close a budget shortfall, violated a constitutional amendment approved by voters in November that prohibits the state from raiding local tax revenue.

“California voters overwhelmingly passed Proposition 22 just eight months ago to stop state raids, shifts and diversions of local redevelopment funds,” said Chris McKenzie, executive director of the League of California Cities, whose members include Los Angeles. “The governor and Legislature have blatantly ignored the voters and violated the state Constitution.”

The lawsuit against the governor’s budget director, Ana Matosantos, also requests the state’s highest court to issue a stay by Aug. 15 to prevent the legislation from going into effect until the court rules on the merits of the legal challenge.

The budget approved by Brown last month threatens to dissolve the state’s 398 redevelopment agencies, which use property taxes to improve blighted neighborhoods. The state agreed to allow new redevelopment programs to be created if the existing ones provide $1.7 billion in local tax revenue by January.

The legislation would require the Los Angeles redevelopment agency to pay the state about $100 million in January and then up to $52 million annually or be faced with having to dissolve the agency and end its work.

State officials, including Senate President Pro Tem Darrell Steinberg (D-Sacramento), disputed the lawsuit’s claims.

“The Legislature’s actions are legal and balance redevelopment with other public priorities, including education,” Steinberg said.

The Brown administration is also confident it will prevail, said H.D. Palmer, a spokesman for the Department of Finance. “Redevelopment agencies were created by an act of the Legislature in 1945, and they can similarly be dissolved by an act of the Legislature,” he said.

The lawsuit was filed with the Supreme Court rather than a lower court because the deadline for paying the state is looming, therefore the legal issues need expedited action, according to the groups behind the challenge.

San Jose and Union City — which are named petitioners in the lawsuit — told the court in filings that they expect to be unable to make the payment. Los Angeles officials are crunching the numbers, said redevelopment agency spokesman David Bloom, and plan to report to the City Council on Aug. 3 about whether to agree to make the payments.

Christine Essel, chief executive of the Los Angeles Community Redevelopment Agency, said Monday that she is hopeful the Supreme Court will recognize the importance of redevelopment to L.A.’s economic development efforts.

“It’s important that we continue our work building a better, stronger city,” she said.

patrick.mcgreevy@latimes.com