Wes Woods II, Staff Writer
Posted: 08/05/2012 07:05:08 AM PDT

Some Inland Empire cities’ successor agencies to their redevelopment agencies recently had to pay fees – some higher than $4 million – to the California Department of Finance, which upset city officials and a local economist.

“It’s devastating,” said Inland Empire economist John Husing. “What the state has done is to shut down economic development at the local level in the Inland Empire…. It’s the most poorly thought-out money grab by the state I have witnessed in 48 years of following this stuff.”

In San Bernardino County, San Bernardino had to pay more than $4.1 million, Rialto more than $3 million and Redlands more than $2 million for their redevelopment agencies.

In Los Angeles County, Claremont had to pay more than $949,000 and La Verne paid more than $295,000.

Last year, Gov. Jerry Brown signed a bill to dissolve local redevelopment agencies and move their tax dollars to Sacramento, but the law was challenged by the California Redevelopment Association.

In mid-December, the state Supreme Court upheld the law to dissolve the redevelopment agencies, but some had held out pending the final decision, said state Finance Department spokesman H.D. Palmer.

While the issue was ongoing, property tax revenues that were intended to go local agencies such as schools and special districts instead went to the redevelopment agencies, Palmer said.

Legislation in July, Assembly Bill 1484, featured a “catch up” provision that forced the successor agencies to pay back revenues that would go proportionally to schools, counties, cities and special districts, Palmer said.

“The payment mechanism for property tax that should have been made to the districts would have gone to redevelopment agencies to cover the January-through-June period this year,” Palmer said.

On July 13, state Sen. Bob Huff, R-Walnut, issued a news release about the bill describing the Democratic majority-backed legislation as “unacceptable.”

“His position is unchanged,” said Huff spokesman William Bird. “He thinks the state government is literally balancing its budget on the backs of local government and that’s wrong.”

A due bill was sent to the agencies on July 9 and payments were due on July 12, said La Verne City Manager Bob Russi.

Some city officials said they were caught off guard by how quickly the redevelopment payment was wanted.

“From the standpoint of advance notice we were surprised,” said Robb Steel, who ran the Rialto Redevelopment Agency and is now assistant to the city administrator and development services director.

Steel said Rialto had to pay more than $3 million.

The former redevelopment agency has a “fair” amount of cash left but Steel said he expects the state to audit the cash and the city to be “squeezed dry” by next spring after remitting funds to the state for redistribution.

Redlands spokesman Carl Baker said he was surprised by the lack of time to prepare for his city’s more than $2.6 million payment.

“It absolutely came as a surprise to us. It was virtually a last-minute payment,” Baker said. “We had to make provisions to borrow from our utility fund to make the payment. And we filed the payment under protest.”

Baker said most of the payment was made using redevelopment fund money except for $65,000 that came from the utility fund.

“After that, we had a bond due, a $3.1 million bill,” Baker said. “Because this cleaned out our RDA, we had to borrow to make our scheduled bond payment.”

In San Bernardino, economic development chief Emil Marzullo was laid off after the city’s attempt to move its redevelopment agency money to a nonprofit was unsuccessful.

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