Published: 28 July 2012 06:10 PM

Redlands had to loan more than $3 million from its general fund to its redevelopment successor agency on Thursday, July 26, to cover an unexpected demand for more money from the state.

The money to cover the $3.1 million loan came from the city’s water department and was transferred, with City Council approval, to Redlands’ former redevelopment agency, now referred to as the successor agency. The agency needed the money to cover a bond payment due this month.

Redlands had been saving money for the bond payment in the successor agency account, but received a letter on July 13 from the county auditor treasurer stating that any funds in successor agency accounts after June 30, the end of the fiscal year, were reserves and must be returned to the state, Community Development Director Oscar Orci said Friday, July 27.

The state was allowed to take that action under the terms of Assembly Bill 1484, which became law June 27 and modified the original Assembly bill that orchestrated the dismantling of redevelopment agencies throughout California.

The payment was due on July 16 and failure to pay would have resulted in a fine of $10,000 a day, Mayor Pete Aguilar said. Redlands made the payment under protest, he said.

“We disagreed, but we realized we had to make the payment,” Aguilar said.

The city hopes to recoup the money through future property tax distributions from the auditor-controller to the successor agency or through proceeds from the sale of property owned by the former redevelopment agency, Orci said. Redlands’ successor agency will receive its next payment from the county auditor-treasurer in January 2013, he said.

The city has placed the loan on its successor agency’s recognized obligation payment schedule and hopes that the agency’s oversight board and the state Department of Finance will recognize the loan as a debt the agency must pay.

Even though California has dissolved redevelopment agencies statewide, successor agencies continue to receive funds to pay obligations they have incurred, so long as the state has approved them.

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