The California Supreme Court threw a legal monkey wrench into the machinery of redevelopment on Thursday.
The Justices sided with the Legislature and governor in one ruling and, technically, with the cities and counties on another -- to their detriment, in the absence of redevelopment authority.
The decisions, however, potentially could put all those parties on a track to make a deal that would preserve urban renewal programs.
The court ruled to uphold the state's law pulling the plug on redevelopment.
The court invalidated another law allowing it to continue, if redevelopment agencies pay mandated amounts into school and special district funds.
Unless there's a compromise in Sacramento, the cities and counties can't revitalize themselves as they have for several decades.
Thrown into doubt, for now, are ventures such as a new stadium for the Chargers in downtown's East Village. About $150 million in redevelopment money is targeted for site cleanup and preparation.
Also in doubt is a ballpark for a Padres minor league team in Escondido.
With no redevelopment funding for a second expansion of the Convention Center, which was built and expanded once with renewal money, that project needs to squeeze more from other sources.
Also in jeopardy are 2,000 new units of affordable housing, which under redevelopment law, the agencies must allocate 20 percent of their funding.
Some 15,000 affordable units have been built, countywide, as a result of urban renewal subsidies, creating thousands of construction jobs.
Housing advocates and major downtown interests say they're hoping, and are relatively optimistic, that the state and local agencies can reach a compromise.
"You don't throw the baby out with the bathwater. It's really important that we have affordable housing development and the economic benefits that come with that construction, to make sure we have a sustainable economy," said Susan Tinksky from the San Diego Housing Federation.
"The state legislators have said the support redevelopment; now is their opportunity to show they support it. We need to come together and come up with a solution for this, because the infrastructure problems are not going away with this court decision. They're going to stay there. They need a funding source, so they need to get together and create that funding source," said Janelle Riella from the Downtown San Diego Partnership.
Gov. Jerry Brown issued a statement saying the ruling validates "a key component of the state budget and guarantees more than a billion dollars ... for schools and public safety."
Mayor Sanders said he'll start working with legislators "to pass new laws giving us tools enabling reinvestment in our lower-income communities."
Chargers special counsel Mark Fabiani said the team's latest plan for a stadium with convention facilities wouldn't need redevelopment funding.