It wasn't enough for the California Legislature to essentially kill redevelopment agencies throughout the state; lawmakers added a "poison pill" that will basically prevent the agencies from coming back to life.

Within the two redevelopment bills that Gov. Jerry Brown signed into law on June 30 are provisions that say even if the California Supreme Court rules the bills are unconstitutional, the agencies can't sell debt ever again.

That could be the final nail in the coffin for redevelopment agencies, which have been able to use property tax revenue in "blighted" areas to build projects such as the HP Pavilion and convention center in downtown San Jose.

San Jose's agency and others financed projects by selling debt, or issuing bonds, repaying the debt through the growth in those designated areas' property tax revenues. Without that ability, agencies could not exist -- exactly what the "poison pill'' would accomplish.

"I think that provision is indicative of the character of the people who wrote this legislation -- they want to make sure that there is no way to somehow appeal to another branch of government,'' said John Shirey, executive director of the California Redevelopment Association, which represents 398 active agencies throughout the state.

As early as Monday, Shirey, the association, the League of California Cities and the city of San Jose, among others, are expected to file a lawsuit against the state that alleges the two laws violate Proposition 22, passed by California voters in November to prevent Sacramento from raiding local tax coffers.


Shirey said the "poison pill'' provisions would punish the redevelopment agencies should they win a lawsuit challenging the bills.

"They're saying that if you exercise that right (to sue), we'll penalize you," he said.

The only way redevelopment agencies can stay alive is if they pony up their portion of the $1.7 billion the state wants from all the agencies this year. But that's a cost most cities cannot afford as they struggle with their own budget deficits. San Jose officials, for example, say they cannot make the $47 million payment that would be required.

John Vigna, spokesman for state Assembly Speaker John Perez, whose office helped to craft the two bills, defended the poison pill provision as "a fail safe mechanism."

Vigna said if the agencies win a court challenge, the provision would force them back to the negotiating table and "continue working on something that satisfies the governor's concerns, and their concerns." But the negotiations would only involve those agencies that can make the upfront payment.

Lawyers for the redevelopment association say this is the first time they can remember a law that would punish a plaintiff for being successful in exercising its First Amendment right to petition the court.

While the losers in a court case are often punished for filing frivolous lawsuits and forced to pay opposing attorneys fees and costs, CRA's attorneys say they've rarely heard of punishing a successful plaintiff who challenges and overturns an illegal law.

"It's extremely odd,'' said Steven Mayer, the CRA's lead attorney and a director with the San Francisco-based law firm of Howard Rice. While he said he's seen the tactic employed before, it's been rare.

But H.D. Palmer, spokesman for the state's Finance Department, said the department's attorneys can cite precedent where poison pills were included in previous state legislation related to realignment in 2001 as well as medically indigent adults in California.

Mayer countered that in both cases, however, "the provisions are different, and in any event, have not been upheld by the courts.''