To handle the case, Friends of Mammoth hired Bruce Tepper, an attorney who is usually on the other side, representing the public sector, including redevelopment agencies.
"If cities don't regulate themselves, then somebody else will regulate them," said Tepper, adding that his firm periodically takes cases like the Mammoth one as a form of self-policing of the redevelopment industry.
"We're trying to demonstrate to the Legislature they don't need to undertake further reform," he added.
Redevelopment became popular with cities after voters approved the property tax limits of Proposition 13 in 1978. More than half of the local redevelopment agencies in the state have been created since then.
"It does not mean blight suddenly broke out in California in the 1980s and 1990s," said Peter Detwiler, a staff consultant for the state Senate's local government committee.
Rather, cities have desperately sought new funding sources, including redevelopment--which allows them to keep any property tax increases that flow from redevelopment projects.
There are 373 active redevelopment agencies in California. Together they collect $1.8 billion a year in local tax increments.
Seven years ago, the Legislature reacted to what it saw as abuses of redevelopment law by tightening the legal requirements to form a redevelopment zone.
State appeals courts, interpreting those reforms, struck down a redevelopment project in Murrieta in 1998 and more recently one in Diamond Bar. Last week, the state Supreme Court refused to take up that city's appeal.
William Carlson, executive director of the California Redevelopment Assn., said that in addition to applying tighter standards of blight, the Mammoth decision says that early environmental impact assessments of a redevelopment project should be substantially more detailed than they are now.
That, Carlson suggested, will be "very difficult, very expensive."
The court fight over Mammoth's redevelopment project has not stopped the town from pursuing other means of reinventing itself.
Officials successfully wooed Intrawest, a Canadian ski resort developer, to town. The company recently built Mammoth's first 18-hole golf course and an upscale 174-unit condo complex. It is constructing $900,000 townhomes and has plans for more development.
Intrawest also recently entered into an agreement calling for the town to use future tax revenues to repay about $25 million that will be fronted by the company and the Mammoth Mountain ski operation. The money will be used to build parking garages and infrastructure near the mountain, as well as a new airport terminal.
Given those developments, the appeals court ruling is "not the end of the world," said Mammoth Lakes Mayor Rick Wood.
Still, he called the decision "a surprise and a disappointment" that will hinder efforts to spruce up the rest of the town.
