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Money Battles Loom Over Ambiguous RDA Law  


By Jason Islas
Lookout Staff

February 9, 2012 -- With Redevelopment Agencies across the California officially dissolved, local governments, including Santa Monica's, are trying to determine which projects can move forward and how much of the funds accumulated they will be able to keep.

After February 1, 400 RDAs around the state shut down in compliance with a December 29 California Supreme Court decision and transferred their assets to successor agencies. In the case of Santa Monica, the City took over for the dissolved RDA. But what happens next remains unclear.

One looming deadline is March 1, when successor agencies are required to submit a list of the former RDA's "enforceable obligations payment schedules" to the State Department of Finance, the State Controller's Office and the county auditor-controller, according to Governor Jerry Brown's office.

Santa Monica officials are currently compiling their list of enforceable obligations, which they consider to be any financial commitment that, if reneged on, would have legal consequences, said Nia Tang, acting administrative services officer with Housing and Economic Development.

In Santa Monica, City officials have said that redevelopment funds could amount to as much as $300 million worth of capital projects, including rebuilding the Downtown public parking structures and renovating the Civic Auditorium, as well as several projects related to the Expo Light Rail line.

“We're only putting things on the schedule that we're confident we can defend,” Tang said. These include such contracts as those for the Palisades Garden Walk and Town Square projects the City Council approved in June.

But it remains unclear what exactly constitutes a financial "obligation." When asked, Kathy Fairbanks, a partner with Sacramento-based public affairs firm Bicker, Castillo & Fairbanks, responded, “That is a very big problem.”

Jim Kennedy, president of the California Redevelopment Association agreed, saying that there is “a lot of gray area.” He added that the definition of financial commitment “depends on who you talk to.”

It also depends on what projects municipalities are willing to “go to the mat for,” he said.

As it stands, according to the State, commitments made on or after January 1, 2011 – a full year before the California Supreme Court decision – may not be considered an enforceable obligation, Kennedy said.

After the payment schedules are received, a seven-person oversight board will begin reviewing the enforceable obligation schedules as late as May 1, according to Kennedy.

The oversight committee will be made up of two members appointed by the mayor, two by the county board of supervisors, one by the special districts in the former RDA, one by the county school superintendent, and one by the community college chancellor.

H.D. Palmer, Deputy Director for External Affairs at the California Department of Finance, said that the oversight boards have the discretion to review those commitments made after the 2011 deadline to determine whether they meet the criteria for enforceable obligations.

Kennedy said that once the reviews of the schedules begin, "we expect there to be a fair number of disputes."

Kennedy's prediction of the proceedings was rather dour, noting that the process has been called, “a train wreck” and adding that that's what he expects it to be.

Santa Monica's Redevelopment Agency has been reaping about $60 million a year since the City Council rushed to declare two-thirds of the city a redevelopment district after the 1994 Northridge earthquake.

Since then, the agency has collected a portion of the growth in property tax revenues resulting from the development or transfer of properties within the zone. Since the zone encompasses most of the city and since Santa Monica real estate has boomed, City officials were projecting that its redevelopment agency would generate as much as $5.2 billion by 2043.

Since its creation, the City has collected property taxes normally earmarked for social services and used the cash for a number of projects, including the purchase of the RAND property for $53 million, the construction of affordable housing and the seismic retrofitting of Downtown public parking structures.

This is the first in a series of articles analyzing what will happen with Santa Monica's redevelopment funds.


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