Redevelopment proposal drawing fire from critics
James Rufus Koren and Ryan Hagen, Staff Writers
Posted: 01/22/2011 09:57:47 PM PST

The California Redevelopment Association on Thursday asked its members – cities and counties with redevelopment agencies – not to do anything to give redevelopment a black eye as they look for ways to keep the state from taking redevelopment funds.

“I was saying, don’t do the kinds of transactions that are going to be criticized, either by your local community members or members of the press,” said John Shirey, executive director of the California Redevelopment Association. Cities across the state have been looking for ways to keep redevelopment money since Jan. 10, when Gov. Jerry Brown proposed eliminating redevelopment agencies.

But San Bernardino seems to be flying in the face of the redevelopment association’s advice. While most local cities are taking a more reserved approach, San Bernardino officials are studying a plan that critics say boils down to “hiding money.”

“It raises all sorts of open government issues and all sorts of legal issues about the use of these dollars,” said Steven Greenhut, editor in chief of and director of research at the Pacific Research Institute’s Journalism Center. “It has all sorts of things that I think need to be looked at.”

The deal in question, one brought to the City Council at a special meeting Thursday evening, would create a contract that calls for passing the property tax money that would normally go to the city’s redevelopment agency to a nonprofit agency outside of the City Council’s control. The board took no action Thursday.

The plan, presented by Emil Marzullo, interim director of San Bernardino’s redevelopment agency, goes one step beyond a plan approved by the board of the Los Angeles redevelopment agency.

The Los Angeles plan, which has not been approved by that city’s council, calls for transferring tax increment – the portion of property taxes that fund redevelopment agencies – to the city. Marzullo said that plan wouldn’t work in San Bernardino.

“Because in this case the boards (of the city and redevelopment agency) are one and the same, that would be so transparent it would be easy to undo,” he said. “The key is to set it up so it could at least be argued you’re going to impair a contract.”

That is, the plan is an attempt to make it appear that taking money away from the nonprofit would cause the city to breach a contract – something Brown said his plan would not do.

Chris Sutton, a Pasadena attorney who specializes in redevelopment issues and is a member of several groups that oppose redevelopment, said Marzullo’s statement is a clear sign of misbehavior.

“It’s like they think no one is looking,” Sutton said. “It reminds me of tapes the FBI gets when the Mafia is being investigated. `Oh, we’ll dump the body over at Jimmy’s house and the cops will think Jimmy killed him.”‘

As outlined at Thursday’s meeting, the redevelopment agency board – which is composed of the City Council members – would transfer revenues to a nonprofit development corporation called the Sustainable Communities Reinvestment Partnership and appoint board members who would change that nonprofit’s bylaws so that it could fund the type of projects the redevelopment agency had handled in the past.

To create a binding contract that the state could not invalidate, the contract would term the transfer “irrevocable” and only three of the permanent board members would be directly selected by the city.

Those members would be appointed by the mayor and confirmed by the City Council, and the nonprofit itself would choose the remaining board members.

But some at the meeting feared the move, designed to ensure that courts would find the nonprofit to be a separate legal entity, also carried the danger of giving taxpayer dollars to a group with no direct accountability to voters.

“You will not always be the mayor, and the bylaws can be changed in a minute by the nonprofit,” City Attorney James F. Penman told Mayor Pat Morris. “Voters might be upset if all of a sudden we go from $300 million controlled by eight elected officials – the mayor and seven council members – to control by an unaccountable board because the Legislature may or may not go along with a few lines on the governor’s budget.”

Indeed, other local cities, say they are waiting to see what, if any, action the Legislature will take before deciding if they should fast-track redevelopment projects or take other actions to hold on to redevelopment money.

Council members Thursday said they weren’t committed to this particular method of keeping redevelopment dollars – so long as they acted quickly to protect the money, which they agreed was vital for city projects.

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