Redevelopment agencies across California got a temporary stay of execution Thursday when the State Supreme Court agreed to hear a challenge to their death sentence.

The Legislature essentially outlawed redevelopment agencies when it approved the state budget over the summer. Gov. Jerry Brown, who signed the budget package into law, said he believed the agencies were costing the state $1.7 billion per year.

Now, cities such as Santa Clarita that want to revitalize older communities such as Old Town Newhall must pay what some officials call a “ransom” to the state if they want to do it through redevelopment.

In a news release Thursday, the League of California Cities, which opposes Brown’s action, said the high court agreed to hear California Redevelopment Assn. v. Matosantos (S194861). The petition challenges the constitutionality of the recent budget bills (AB 1x 26 & 27) that eliminate redevelopment agencies unless they pay the ransom.

The court also granted a stay against the immediate termination of redevelopment agencies, but ordered that they may not take on new debt obligations until the case is heard.

“We’re very gratified that the California Supreme Court has agreed to take our case, issued the stay we requested to preserve the status quo, and that it is moving forward on an expedited basis,” said Chris McKenzie, Executive Director of League of California Cities.

McKenzie said the budget bills violate Proposition 22, a voter-approved measure that bars the state from “shifting” tax dollars from cities, counties and redevelopment agencies to close state budget holes.

The court is fast-tracking the challenge, with oral arguments this year and a decision expected by Jan. 15. That’s the date redevelopment agencies would otherwise have to make thier first “ransom” payment.