Community Redevelopment Association (CRA) Prevails in Court Case - Redevelopment Agencies Keep $350 Million!
On April 30, 2009, Sacramento Superior Court Judge Lloyd Connelly ruled in CRA's favor and found unconstitutional a provision in the current state budget, which would have required redevelopment agencies statewide to transfer $350 million to be used to fund State obligations. The Pasadena Community Development Commission would have had to shift $2,232,491 into the Educational Revenue Augmentation Funds (ERAF).
Background on the Lawsuit
The suit before the court was brought by the CRA and sought to block parts of budget trailer bill AB 1389 (2008). The lawsuit argued that State take of redevelopment funds to balance the State's budget are unconstitutional because the California Constitution states that redevelopment funds can only be used to finance redevelopment project activities. The lawsuit contended that taking redevelopment funds to balance the state's budget does not qualify as a constitutionally permitted use of tax increment funds and is a clear violation of the Constitution.
While a great victory for all redevelopment agencies, the ruling, however, isn't likely to be the last word. It is expected that the State Department of Finance will appeal the decision. Stay tuned for future updates on this important case.