State Supreme Court to Rule on Future of Redevelopment Agencies

The California Supreme Court is expected to issue a ruling Thursday on the legality of two new laws that would require the Fountain Valley'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.

In Fountain Valley, the city council begrudgingly voted in July to participate in the state's alternative redevelopment program, which would cost the city an estimated $3 million in remittance to the state for 2011 and another $720,000 for the upcoming fiscal year. City staff have referred to the proposed remittance as a "ransom."

Local projects funded by redevelopment money include Costco and many of the businesses adjacent to I-405.

-- City News Service contributed to this report.