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Cities lose in court battle over redevelopment funds

May 30, 2012 |  4:57 pm

Huntington Beach

A Sacramento County Superior Court judge Wednesday afternoon refused to side with a group of California cities in their battle with the state over hundreds of millions of property tax dollars that used to flow to local redevelopment agencies.

Judge Timothy M. Frawley said he would not grant the request from Glendale, Pasadena, Huntington Beach and other cities for an injunction that would have prevented the payout of property taxes Friday to schools and other local governments.

Cities believe some of that money belongs to them and should be used to pay for local projects such as parks, affordable housing and freeway intersections that had been agreed upon before Gov. Jerry Brown won his battle to eliminate California’s 400 municipal redevelopment agencies late last year. Brown argued that the state can no longer afford redevelopment, and the $5 billion in property taxes they take in each year will now flow back to school districts and counties.

But cities and the state have been fighting for months about the way the agencies are being dismantled.

The law allows cities to hold on to some of the $5 billion they used to collect each year so they can pay existing debts. The problem is that the two sides have drastically different views of which contracts must be honored as "enforceable obligations."

As of last week, state officials had questioned more than $350 million for this year alone that cities said they were entitled to for projects that were already decided upon.

Neither side expects this hearing to be the last time they see each other in court. A spate of additional lawsuits is expected over specific projects.


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Photo: Huntington Beach is one of the cities that failed in the attempt to win an injunction. Credit: Allen J. Schaben/Los Angeles Times