CA Supreme Court Ruling Expected on New CRA Tax Laws

The California Supreme Court was expected to issue a ruling Thursday on the legality of two new laws that would require the city's Community Redevelopment Agency -- and similar agencies across the state -- to give a portion of its tax revenues to the state.

The court is considering whether the laws, passed by the Legislature earlier this year, are invalidated by Proposition 22, which bars the state from seizing local tax money. Redevelopment agencies are funded by the increase in tax revenue generated by projects in their areas.

One statute forces redevelopment agencies to close, while the other allows local officials to keep them open if they make payments to the state.

Supporters of the laws, including Gov. Jerry Brown, say the money is better used to fund schools and other municipal functions during tight budgetary times. They cite a state analyst's report that shows the cost of redevelopment growing without any tangible economic benefit to the state.

City Councilwoman Jan Perry, a candidate for mayor, said reducing the power of redevelopment as an economic development tool would be a huge blow to blighted areas.

"Tax increment has enabled us to leverage other public and private dollars to build more housing for people who were formally homeless," she said.

Perry recited a litany of projects in her downtown and South Los Angeles district that would not have been built without redevelopment money, including the Downtown Women's Shelter, the revitalization of the Dunbar Hotel and a mixed-use grocery store and housing complex near South Central Avenue and East Adams Boulevard.

If the court upholds the two laws, CRA/LA, the largest such agency in the state, would be forced to pay an estimated $100 million to the state, based on a pro-rated formula of statewide property taxes in redevelopment zones.

"If the state is allowed to move ahead it will appear the court will have ignored the will of the people in overwhelmingly passing Prop 22, which attempted to block state raids of local funds," said CRA/LA spokesman David Bloom. "At least the decision will provide some clear resolution after a year of uncertainty and allow the city's most important economic development tool to get back to full operation, if at a diminished level."

There are two CRA development zones in North Hollywood. See these previous Patch stories to learn more about them: