The Monrovia City Council will consider passing a law Tuesday that paves the way for the city to pay California $1.2 million to save its redevelopment agency if a lawsuit against the state doesn't succeed.
The California Redevelopment Association and the League of California Cities jointly filed a lawsuit in California Supreme Court Monday in an effort to block two state laws requiring cities to fork over millions to the state to keep their redevelopment agencies.
The city is now considering the passage of a "continuation ordinance" Tuesday, a law that effectively acts as a pledge that the city will pay up in case the CRA's lawsuit fails. City Manager Scott Ochoa calls the payments "ransom money."
"Both of [the laws] on their face are just blatantly illegal and unconstitutional and just bad politics," Ochoa said. "At the end of the day it’s a money grab."
Under the two bills passed by the state legislature and signed into law by Gov. Jerry Brown, Monrovia's redevelopment agency would have to pay an estimated $1.2 million up front to the state this year and about $400,000 annually to stay afloat. If the payments aren't made, the redevelopment agency would be eliminated.
The state would collect a total of about $1.7 billion this year and an additional $400 million in subsequent years from redevelopment agencies under the laws, according to the CRA's lawsuit.
Adopting the "continuation ordinance" allows the city to proceed with redevelopment deals until the CRA's lawsuit plays out in court. If it does not pass the ordinance, it could not move forward with deals like , Ochoa said.
The CRA, which represents 361 redevelopment agencies across the state, including Monrovia's, said in its suit that the new laws are unconstitutional and undermine the will of the electorate by circumventing the state constitution and Proposition 22, a 2010 voter-approved ballot measure that barred the state from taking redevelopment funds.
The state is legally forbidden from taking property tax funds from redevelopment agencies under the state constitution. But the two new state laws force cities themselves to make payments to the state with whatever funds they see fit, effectively bypassing the constitutional requirement that redevelopment funds not be taken, the CRA argues.
"The fact that the legislature left it up to local jurisdictions to determine which tax proceeds must be surrendered does not excuse these constitutional violations," the CRA's lawsuit reads.
Gov. Brown has said that money should not be used by redevelopment agencies for private projects when basic services, like education, are in dire need of funding.
H.D. Palmer, a spokesman for the Department of Finance, told the Los Angeles Times Monday that he believes the laws will hold up in court.
"Redevelopment agencies were created by an act of the Legislature in 1945, and they can similarly be dissolved by an act of the Legislature," he told the paper.