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Cities take state to court over giant redevelopment 'mess'

May 30, 2012 | 10:05 am

Five months after a California Supreme Court decision gave the state the authority to eliminate redevelopment, cities are preparing to go back to court to contest the way the agencies are being dismantled.

California's approximately 400 municipal redevelopment agencies were eliminated as part of a cost-saving measure by the state last year. Even so, city officials argue that hundreds of projects should be allowed to proceed because they were conceived before the agencies' demise.

But state officials are fighting some of those plans, questioning, among other things, whether they were in place before a June 2011 deadline set by law.

The first round in the case will be fought Wednesday in Sacramento County Superior Court. A group of cities including Pasadena and Glendale are asking a judge to prevent disputed property tax money from being paid out Friday to school districts and other entities, as the state intends. The cities argue that the money — perhaps tens of millions of dollars — must be held in trust until their conflicts with the state are resolved.

As of Friday, state officials had questioned more than $350 million in projects for this year alone. Some of the denials have left city officials angry.

"Their No. 1 objective is to shut these projects down so they can take the money," said Chris McKenzie, executive director of the League of California Cities, referring to the cash-strapped state. "It's just insanity the way this program is being administered."

Cities said the state might force them to abandon projects that have been promised to citizens and bondholders and that are key to revitalizing recession-battered neighborhoods. Already, some cities have had to lay off staff whose salaries were paid with redevelopment funds.

State Department of Finance officials counter that they are only following the law. They are counting on $1.4 billion from former redevelopment agencies to help fill the yawning hole in California's budget next year.

Kimberly Hall Barlow, a partner at the law firm of Jones & Mayer who represents a number of cities, summed up the feeling of many city and state officials: "It's a giant mess," she said.


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