Andrew Edwards, Staff Writer
Posted: 07/30/2012 06:21:46 PM PDT

Special Section: San Bernardino

SAN BERNARDINO – The city’s bankruptcy is not the only major financial challenge for local officials.

Recent decisions in Sacramento effectively neuter the attempt to preserve redevelopment by creating a nonprofit called the Economic Development Corp.

“There’s no funding for it,” administrative services director Terri Baker said.

San Bernardino is not alone in having to adjust to the end of redevelopment. A 2011 state law supported by Gov. Jerry Brown dissolved local redevelopment agencies to shift their tax dollars to Sacramento.

But San Bernardino officials differed from their counterparts in other cities by attempting what amounted to a governmental Hail Mary pass to keep hundreds of millions of tax dollars in town.

In March 2011, the council voted to transfer $525 million from the San Bernardino Economic Development Agency, which was on its way to being phased out, to a nonprofit called the San Bernardino Economic Development Corp.

At the time, proponents could not be certain their idea would work. Emil Marzullo, who served as the EDA’s chief and would go on to take the reigns of the nonprofit, acknowledged when the decision was made that he was not entirely convinced the plan would succeed, but wanted to try to keep local tax dollars in San Bernardino.

Sacramento officials eventually decided the plan would not work. The state’s Finance Department denied the city’s attempt to shift money to the EDC and relayed its decision in letters sent to City Hall in April and May.

Marzullo was laid off from the EDC after the state’s decision came down. Finance did not allow San Bernardino to keep enough money for administrative work to pay his salary.

“You really don’t need the executive director if nothing is going to be done,” Marzullo said.

Finance’s more recent letter, dated May 31, states Finance’s decision to deny the $525 million in anticipated revenue to the EDC.

One of the EDC’s major actions was to approve $4.7 million in assistance for Regal Cinemas’ opening of a new theater downtown.

The theater opened in early July.

State officials also denied a $375 million agreement between the now defunct EDA and another affiliated nonprofit, called Affordable Housing Solutions.

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