A 126-page lawsuit was filed with the California Supreme Court Monday. The California Redevelopment Association and the League of California Cities says what the state is trying to do violates Proposition 22 which was passed by 61 percent of the voters and makes it illegal for the state to seize or redirect monies dedicated to local governments.
The upgrades and improvements at San Jose's historic Civic Center may be the last big project the city's redevelopment agency ever completes. The $11.4 million in renovations started in 2008 and are just finishing up just as the redevelopment agency fights to survive.
The California Redevelopment Association filed a lawsuit with the state Supreme Court arguing the budget deal that eliminates the state's 400 redevelopment agencies is unconstitutional.
"It's an illegal way of going about doing something because what they're doing is redirecting monies," said San Jose City Attorney Rick Doyle. "At the end of the day, where those monies go is really the issue."
The state argues the Legislature created redevelopment agencies in 1945 and has the power to eliminate them. The complex budget deal that closed a $27 billion budget shortfall relies on $1.7 billion in property tax revenue that was allocated to redevelopment agencies and now must now be spent on schools.
"The fundamental issue here was can the state, given our state's fiscal situation, continue to business as usual and the Legislature said no," said H.D. Palmer, spokesperson for the State Department of Finance.
San Jose's redevelopment agency is responsible for projects ranging from the Tech Museum to affordable housing. The agency has gone from a staff of 90 people last year to just eight today. If nothing changes it will cease to exist altogether on Oct. 1.
"Us that are remaining, we are just going to proceed as we can until there's either no longer a redevelopment, or hopefully the lawsuit prevails and we come back slowly," said Richard Keith, the redevelopment agency's managing director. Because the clock is ticking on this issue, the lawsuit also seeks to block any changes to redevelopment agencies across the state until this lawsuit can be heard.