Ryan Hagen, Staff Writer
Posted: 09/13/2011 10:01:02 PM PDT

GRAND TERRACE – After nearly five months of closed-door negotiations, the city agreed Tuesday night to pay almost $2.3 million owed to the San Bernardino Valley Municipal Water District.

Grand Terrace learned of the debt in May, after the water district realized that in fiscal years 2008-2009 and 2009-2010, the county Auditor, Controller and Treasurer’s Office used the wrong formula to calculate the amount Grand Terrace’s redevelopment agency needed to pay to the district.

Despite early agreement on the basics of a repayment plan, details were repeatedly changed because of a law abolishing all California redevelopment agencies – which was passed in June, along with another law allowing cities to pay to maintain the agencies, then stayed by the state Supreme Court – said City Manager Betsy Adams.

“This is an item that’s been in closed session a long time, and some ancillary issues still are but we can now report the debt and that the water district gave us 10 years to repay it,” Adams said. “It was extremely generous of them to do so, and I think it’s important for that to be publicly acknowledged.”

The court’s stay prevents redevelopment agencies from entering into new agreements, so the council – which also sits as the board of the redevelopment agency – agreed to repay the debt out of city funds.

The debt was discovered as Grand Terrace grappled with a $50,000 general fund deficit. Finances remain extremely tight in the city.

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