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6:30pm | The California Redevelopment Association on Monday submitted its appeal with the Third District Court of Appeal to overturn a $2.05 take of redevelopment funds by the state.

CRA is appealing a May 2010 Sacramento Superior Court decision by Judge Lloyd Connelly upholding Assembly Bill X4-26 passed in July 2009 as part of the 2009/10 state budget.

The bill authorizes the shift of $2.05 billion in local redevelopment tax revenue to fund the state’s obligation to schools. The decision is expected to cost Long Beach’s Redevelopment Agency around $6 million, City Manager Pat West has said.

The CRA argues that ABX4-26 violates the State Constitution. “Unless overturned, Judge Connelly’s ruling gives legislators unlimited discretion to change the definition of redevelopment to suit their purpose for the sole reason of plugging the budget deficit,” said CRA Executive Director John Shirey, a former Long Beach deputy city manager. “Last year through AB X4-26, legislators took local redevelopment funds under the guise of benefit to schools when all they really did is short-change schools the same amount of money that would normally come from the State.”

“Redevelopment funding should be used to create jobs, improve neighborhoods and bolster economic development in blighted areas,” Shirey continued.

Under the terms of ABX4-26, the $2.05 billion was divided into two payments: $1.7 billion in 2010; $350 million in 2011. In each of the two years, redevelopment agencies are forced to turn over their funds, which will ultimately funnel into the Supplemental Educational Revenue Augmentation. SERAF funding then is turned over to school districts in redevelopment areas, and the state lowers its contribution to those same school districts by an equal amount.

The first $1.7 billion payment was paid by redevelopment agencies to county auditors on May 10, 2010. The Appeal seeks repayment of those funds by the State and a prohibition of the second payment of $350 million due in 2011.

CRA hopes the Court of Appeal will rule by May, 2011, before the next payments are due.
In an unrelated matter, state lawmakers are weighing another bill that would expand redevelopment agencies’ authorities, according to a story in the Bond Buyer.

AB 2531 would authorize redevelopment agencies to provide loans, loan guarantees, and other financial assistance to businesses in redevelopment project areas for industrial and manufacturing uses if they met one of several criteria, such as increasing employment or reducing greenhouse gas emissions, according to the story.

The bill is an effort to expand the ability of redevelopment agencies to create jobs in the emerging green sector and create green communities, according to the bill’s sponsor, the city of Los Angeles.

The bill is being supported by several city governments, and the California Redevelopment Association. Opposition includes the California State Association of Counties, and Los Angeles County.

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