The court decision struck down the compromise, revenue-sharing law on the grounds that it violated Proposition 22, passed by voters in 2010 to limit the state's fiscal powers.
Chief Justice Tani Cantil-Sakauye dissented on that part of the ruling, complaining the court majority read Proposition 22 too broadly.
"Although the system of redevelopment in this state has been far from perfect, it certainly is worth noting redevelopment projects like the restored Public Market Building in downtown Sacramento, the Bunker Hill project in downtown Los Angeles, Horton Plaza and the Gaslamp Quarter in downtown San Diego, HP Pavilion in San Jose, and Yerba Buena Gardens in downtown San Francisco," the Chief Justice wrote.
She called the compromise bill an attempt to "balance the benefits of continued redevelopment with the need to fund vital local government services."
Some legislators who have long been critical of redevelopment said Thursday they would oppose any effort to revive the agencies.
"Redevelopment has become a cash cow for developers, NFL team owners and big box stores who have been on the public dole for a long, long time, subsidized by these redevelopment funds," Assemblyman Chris Norby (R-Fullerton) said after the court's ruling. The agencies "should have shut up" instead of suing to overturn the laws. "Now they've lost it all," he said.