City funds released to fill state shortfalls
This story appeared in the Antelope Valley Press
Saturday, February 21, 2009.By BOB WILSON
Valley Press Staff Writer
PALMDALE - Voting grudgingly but unanimously, the City Council agreed Wednesday to turn over $2.4 million in redevelopment funds to the state.
The payment was demanded by Los Angeles County's tax assessor, whose office asserted Palmdale owed more than the amount already paid to other agencies supported by city redevelopment funds.
California cities are allowed to benefit from redevelopment revenue by agreeing to contribute a portion of it to local school districts, water agencies, fire departments, libraries and other public resources.
Redevelopment revenue is generated from the resulting increase in county property taxes generated by a property's improvement.
The county's demand for more pass-through funding was based on county calculations after the adoption of the state budget in September.
Palmdale and other cities across the state are contending the calculations are based on flawed assumptions.
Cities that fail to make the payments risk losing the authority to operate their redevelopment agencies, which are used to spur economic development and revitalize blighted housing.
To make the payment, Palmdale's councilmembers - in their capacity as directors of the legally separate Community Redevelopment Agency - voted 4-0 to borrow $2.4 million from an account with funds earmarked for development of senior housing in the Courson Connection revitalization project.
The council then voted 4-0 to transfer the money to the state's Educational Revenue Augmentation Fund - a fund created to make up state shortfalls in school funding.
The council agreed to pay the funds under protest.
Jill Ward, the redevelopment agency's principal project manager, said, "The reason for the payment under protest is that Palmdale, along with other redevelopment agencies statewide, believes that the payment is illegal.
"There is a lawsuit pending by the California Redevelopment Association, and we're awaiting a decision on that matter," Ward said.
"If the payment must be made, we're making it under protest and we're seeking reimbursement" when the lawsuit is decided, she said.
Earlier this month, Lancaster's City Council, acting as that municipality's Redevelopment Agency, agreed to turn over, under protest, an additional $783,800 in pass-through funding to an augmentation fund.
Since its 1992-93 fiscal year, the city has lost $10.3 million to the augmentation fund because of the Legislature's fiscal mismanagement, Mayor Pro Tem Steve Hofbauer said.
"There's a whole lot we could be doing with that (money)," Hofbauer said. "This is nothing more than the state balancing its budget on our backs."
Danny Roberts, executive director of the city's redevelopment agency, pointed out that, of the $2.4 million sum now headed to the state, "there is no guarantee that a single penny of that will come back to any of the schools in Palmdale."
"This is outrageous," Mayor Jim Ledford said.
According to an advisory sent to Palmdale by its property tax consultants, the problems were created by Assembly Bill 1389, a trailer bill adopted with the 2008-09 state budget.
The bill made county assessors responsible for reviewing the calculations for pass-through payments and confirming the amounts to be paid.
Municipal officials across the state contend that county assessors are erring because they base their calculations on revenues received instead of amounts billed.
The revenues received include penalties, interest and other funds collected in addition to the tax amounts billed.
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