Hand Out

Published: Dec. 20, 2012
Updated: Dec. 21, 2012 7:02 a.m.

The state Department of Finance has demanded in recent weeks that 19 Orange County cities and the county itself turn over a combined $263 million in unused funds previously earmarked for low- and moderate-income housing.

Some cities have already paid up, including Anaheim and Buena Park, which, according to the state, had unused funds of $13.9 million and $4.6 million, respectively. Others are fighting the demand, saying the state’s calculations are wrong. Officials in at least two cities still are trying to figure out what to do.
Article Tab: This building in theTina Pacific area is being leased by the Illumination Foundation from the city of Stanton for a dollar a year to use as temporary housing for the homeless.

“I think we’re going to seek an injunction against the state to stop this,” said Dave Shawver, mayor of Stanton, which was told by the state in November that it had to cough up $1.4 million in unused funds.

The city councils in Stanton and Santa Ana are holding meetings today to discuss their responses to the state’s demand. The state says Santa Ana owes more than $56 million in unused low- and moderate-income housing funds. Santa Ana city officials declined to comment until the meeting.

The state says the cities and the county must turn over this money in the wake of last year’s dissolution of California’s 400 redevelopment agencies, which were required to set aside property tax revenue for low- and moderate-income housing. Under the law, these unused funds would not go to the state, but rather be redirected to schools, cities, counties and special districts.

The state Department of Finance says it is merely enforcing the law. State finances will not directly benefit from these funds, although as more of this money goes to schools, the less the state has to provide them out of the General Fund to meet the Proposition 98 minimum school-funding guarantee.

If the cities and the county do not pay, they could see their sales or property tax revenue withheld by the state, or officials could even face criminal penalties for willfully disregarding the law. But Department of Finance officials say initially they will be trying to work with local governments to avoid any punitive actions.

For weeks this fall, department officials corresponded with city and county representatives all across the state about their unused low- and moderate-income housing funds. Some cities didn’t challenge the department’s calculations and turned over the money. That’s what Garden Grove did when it received a letter demanding $4.2 million.

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