Cities face big losses

James Rufus Koren, Staff Writer
Created: 05/04/2010 06:29:25 PM PDT

Local redevelopment agencies will have to cough up millions of dollars next week, delaying or scrapping redevelopment projects across the region.

A judge ruled Tuesday that California can order redevelopment agencies to give money to public schools in a complex scheme that aims to boost the state’s bank account by $2.1billion over the next two years.

“It’s tragic irresponsibility on the part of the state,” said Rancho Cucamonga Mayor Don Kurth. “The state has been irresponsible in balancing its own budget and instead of solving the problems that the state has had, it reaches into the cities and takes our funding.”

As part of the 2009-10 budget package, state lawmakers called for taking $1.7 billion from redevelopment
agencies – city and county agencies that use a portion of property taxes to clean up blight and bring business to specific areas – to help balance the state general fund. The California Redevelopment Association filed a lawsuit, saying the California Constitution prohibits using redevelopment money for other purposes.

But Sacramento Superior Court Judge Lloyd Connelly ruled Tuesday that the state raid is legal, given that redevelopment money technically goes to schools in redevelopment areas.

In his ruling, Connelly said the benefits of redevelopment “depend upon the existence of adequately maintained and financially solvent schools.”

But the money going to schools is only the first step in what some see as a shell game that ends with $1.7 billion in state coffers.

“It just moves it around,” said Don Gee of the San Bernardino Economic Development Authority. “It takes money from local agencies and gives it to the state. They’ve said it’s for the schools, but it’s not really.”

The redevelopment money will go to schools in redevelopment areas, where it will replace property tax money. The property tax money will then go to a special state fund and then to county offices of education. From there, the money will go back to schools, which will allow the state to pull back other funds, or to county offices of education, which will repay it to the state.

“I just can’t believe these people,” said Fontana Councilwoman Acquanetta Warren. “Education is important, but this is coming at the expense of communities that are trying to make it. When (students) get out of school, where do they work? Has anybody thought about that lately?”

Local city and redevelopment officials say the funds the state is taking are used for economic development and to help create jobs – something the state desperately needs.

“How do you attract businesses that bring jobs in this kind of atmosphere?” Warren asked.

The California Redevelopment Association plans to appeal Tuesday’s ruling and will ask the appellate court to allow agencies to hold onto their money while the appeal is being heard.

If the court denies that request, redevelopment agencies must pay by Monday. On that day, redevelopment agencies in San Bernardino County will owe $176 million; agencies in Los Angeles County will owe $418 million.

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