California Cities Fight State’s Money Grab

SACRAMENTO (CN) - California unconstitutionally snatched $3.75 billion from city Redevelopment Agencies for schools, cities claim in a Superior Court class action. Suing on behalf of its members, the California Redevelopment Association claims Assembly Bill X4-26 violates the California Constitution, which states that the Legislature "'may not enact laws allocating tax increment revenues for purposes unrelated to development.'"

ABX4-26 takes $1.7 billion from redevelopment agencies this year and $2.05 billion next year and sends it to public schools. Plaintiffs, including the cities of Union City and Fountain Valley, says the state made the money grab to try shift the burden of education funding.

The Association says that the money seized for the schools had been set aside to repay bondholders and creditors who funded redevelopment projects. Without that money, the group says, cities will be forced to breach their contracts with creditors.

The cities want the bill enjoined from being implemented as scheduled, on May 10, 2010. They are represented by Richard Brandt with McDonough Holland and Allen

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