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San Jose, Union City Sue State Over Redevelopment Changes

SACRAMENTO (CBS / AP) -- Groups representing California redevelopment agencies and cities are suing the state to halt a change that would eliminate the agencies and funnel an estimated $1.7 billion to local services.

The California Redevelopment Association, the League of California Cities and two cities—San Jose and Union City—filed the lawsuit Monday with the California Supreme Court. They asked the court to block the redevelopment change from taking effect until the case can be heard.

The Legislature approved two budget bills in June that would eliminate the state's 400 redevelopment agencies by Oct. 1. It allowed local governments to launch new agencies if they agreed to pay a share of property taxes to local governments, replacing money the state pays.

Cities and agencies called that a "ransom demand."

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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