BY JIM MILLER
Published: 30 March 2012 05:57 PM
SACRAMENTO — Local officials who once oversaw billions in redevelopment spending with little interference from the state now are having to make the case for every penny.
In hundreds of draft plans approved in recent weeks, local governments list proposed payments to begin settling redevelopment debts and contractual obligations for agencies that shut down Feb. 1. Final plans for the first six months of 2012 must be acted on by April 15, and plans for the second half of 2012 are due less than four weeks later.
Redevelopment agencies in Riverside and San Bernardino counties were among the most active in the state, with almost 20 percent of total redevelopment spending in 2009-10. As they rush to meet the deadlines, local officials contend it’s often unclear what can go on the lists, known as “recognized obligation payment schedules.”
State auditors, meanwhile, already have flagged some proposed payments, raising the prospect of courtroom fights across the state over disputed expenses.
The outcome has major implications for California finances. Budget writers assume that the state’s bottom line will benefit from $1 billion in former redevelopment revenue in the current fiscal year, and more in subsequent years. But that number hinges on how much money goes to settle the affairs of former redevelopment agencies.
“The challenging thing is we’re not only implementing the process, we’re figuring out what the process is,” said San Bernardino County Auditor-Controller Larry Walker. Auditor-controller offices oversee newly created funds to pay the former redevelopment agencies’ approved expenses.
The Brown administration’s Department of Finance and the state controller’s office will have the final say on what expenses get paid. Finance department spokesman H.D. Palmer said the department has reassigned auditors to focus on reviewing payment schedules.
The post-redevelopment landscape could yet change again. Several bills pending in the Legislature would revive some parts of the redevelopment program, such as for affordable housing.
Created after World War II and expanded over subsequent decades, redevelopment worked by collecting a share of the growth in property tax revenue in redevelopment areas, known as the tax increment. That money — $5.4 billion statewide in 2009-10 — has financed projects ranging from new sidewalks to downtown facades.
Critics, however, said the program came at the expense of the state, which had to make up the difference for property tax revenue diverted from schools. Lawmakers passed the bill scrapping redevelopment last June. Cities and redevelopment agencies challenged the legislation but came out on the losing end of a Dec. 29 decision by the California Supreme Court.
The timing of the court ruling yielded a slew of deadlines in only a few months. By March 1, redevelopment-successor agencies needed draft payment schedules covering the first six months of the year. The final plans must go before new oversight boards by April 15 — the same day draft plans for the July-December period are due.
Meanwhile, property-tax revenue that used to go to the agencies has started to collect in the auditor-run trust funds. After the approved payments are made, what remains in the funds will go mainly to schools, reducing the state’s obligation by about $1 billion in 2011-12. In addition, counties will get an estimated $340 million, cities will get $220 million, and $170million will go to special districts.
The draft plans suggest that the percentage of leftover revenue will vary.
For example, the city of Riverside’s plan for the first six months of the year shows about $25 million in proposed payments from the trust fund, such as $500,000 toward a new fire station. In 2009-10, the agency had total tax increment of $58 million.
Riverside County’s plan shows more than $70 million in proposed payments from the trust fund, including about $200,000 for building facades in the Jurupa Valley Project Area. The county’s redevelopment agency collected $99.3 million in tax-increment revenue.
Fontana’s plan contains about $87 million in January-June payments, including more than $9 million for the Duncan Canyon interchange project. In 2009-10, the agency reported the ninth-most tax-increment revenue in the state, $101.4 million.
“Before the dissolution of redevelopment, we were spending most of what we brought in,” said Lisa A. Strong, Fontana’s management services director and deputy treasurer.
Some local government officials seem to have taken a see-if-it-will-fly approach to their payment schedules. Rialto’s plan, for example, includes “as many things as they possibly can conceive of that meet the definition of enforceable obligation under the statute,” according to minutes of a Feb. 28 Rialto City Council meeting.
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