The California Supreme Court ruled this morning that the state is free to eliminate redevelopment agencies across California and take $1.7 billion of their funds under Sacramento-approved legislation passed earlier this year. The measure, AB26, was approved by Jerry Brown in an attempt to inject some funds back in to the State budget, but was quickly followed by a lawsuit from an association of redevelopment agencies and California cities.

This doesn't bode well for local projects relying on redevelopment funds — high-visibility work like the new Transbay Terminal, the renovated Metreon and Oakland's Fox Theater were all made possible thanks to funds from the local redevelopment groups. Making matters worse, the Supreme Court shot down AB27 — a compromise bill that would have kept redevelopment agencies alive as long as they paid in to help cover other local programs like schools and fire districts. According to the court ruling, the state has the authority to eliminate redevelopment altogether, but not to force the groups to make mandatory payments. We have the voter-approved Proposition 22 from 2010 (designed to prevent the state from looting redevelopment funds) to thank for the ruling on AB27.

Update: In a press release this afternoon, Mayor Lee's office weighed in on the death of redevelopment and the local impact. Calling the court's decision "disappointing", the Mayor's office writes:

In San Francisco, redevelopment has not only played a critical role in creating jobs, transforming disadvantaged communities and delivering affordable housing, but it has spurred economic growth for our entire City at a time when we needed it most. Time and time again, San Francisco has demonstrated that when redevelopment is used to its fullest potential, it can deliver results such as Yerba Buena Gardens and Mission Bay...

And while we are committed to working with the State, we have already started to look at local solutions and alternatives. Abandoning the job creation, economic development, and community benefits that redevelopment has provided San Francisco for decades is simply not an option.