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California Redevelopment Association files $2 billion lawsuit against state

City funds in jeopardy

POSTED October 23, 2009 9:10 p.m.
For the second year in a row, the California Redevelopment Association has filed a lawsuit against the state of California to stop them from taking the local redevelopment funds to use for state purposes.  
The lawsuit, which was filed Tuesday in the Sacramento County Superior Court, is seeking $2.05 billion, exactly the amount of money the state was planning on taking from the redevelopment funds. The state was planning on taking this money through the state budget trailer bill ABX4-26, which was passed July 2009 as part of the 2009/2010 state budget.
If the CRA does not win the lawsuit, then the Turlock Redevelopment Agency is obligated to pay the state $3,334,746 million on May 10, 2010, then follow that with a $686,565 payment in 2011. Both of these payments are their share of the $2.05 billion the state is taking away from the redevelopment agencies throughout the state.
“The state doesn’t care if we can’t do projects needed for the year or if we need to increase jobs,” said Heidi McNally-Dial, Turlock Economic Development and Redevelopment Agency manager. “The $3.3 million endangers lots of projects.”   
Joining the CRA as named plaintiffs are two redevelopment agencies; the Union City Redevelopment Agency in Alameda County and the Fountain Valley Redevelopment Agency in Orange County as representatives for all redevelopment agencies in the state, according to the CRA. The court will be asked to certify all redevelopment agencies as a class of plaintiffs in the lawsuit.
The state believes their decision to take redevelopment funds this year may be legal where the 2008 taking of money was not legal. The money the state is taking for this year would be sent to county auditors who would redistribute the money to local school districts instead of using the state funds for the school districts.
After last year’s lawsuit, the state dropped its appeal in the first case, giving the CRA their $350 million back and ensuring $698,000 stayed in Turlock’s RDA funding.
“We won last year,” McNally-Dial said. “We expect to prevail here.”  
The lawsuit isn’t the only thing CRA is doing to stop the state from taking money from the redevelopment agencies. The CRA is directly dealing with the bill that would have taken the money from the redevelopment agencies, McNally-Dial said. The second step is filing the “Local Taxpayer, Public Safety, and Transportation Protection Act of 2010” to be added to the ballot for November 2010. This act will make it “abundantly clear” that the state can’t do this anymore, McNally-Dial said.  
The Protection Act would be a way to amend the California constitution to prevent the state legislature and governor from raiding local revenues to address the state’s financial problems, according to the CRA.
If the act is passed by the voters, the measure would close loopholes and prevent the state from borrowing, taking, or otherwise redirecting local government, transportation, and public transit funds.  
This act will help prevent CRA from filing a lawsuit every year, McNally-Dial said.  
The official Title and Summary of this act is expected in late November or early December, which can then move forward with collecting over one million signatures needed to qualify for the November 2010 ballot.
Besides the second lawsuit and the Protection Act on its way, Article XVI, Section 16 of the state constitution states that redevelopment money is to be used exclusively for the benefit of redevelopment project areas.  
“We believe we will win because the constitution is clear,” McNally-Dial said.  “The law is clear.”      
To contact Maegan Martens, e-mail or call 634-9141 ext. 2015. 

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