Stanislaus County redevelopment agencies are $13 million poorer this week, following a Monday state deadline to relinquish local funds to help pay for state obligations.
The use of local redevelopment funds to help balance the state budget was approved in the 2009-2010 California budget. Statewide, $2.05 billion in redevelopment funds will be taken as part of the plan.
On Monday, the first payment of $1.7 billion in statewide RDA money was sent to local county auditors. Those auditors will redistribute the funds to area school districts in lieu of the state’s obligation, freeing state general fund dollars for other purposes.
Redevelopment agency funding, under state law, is intended to revitalize blighted local neighborhoods. Common uses for RDA funding include public works projects, the construction of community buildings, or rehabilitation of deteriorated downtowns or housing tracts.
“Taking this funding will stall job creation and economic development efforts in Stanislaus County at the worst possible time,” said Jeff Grover, County Redevelopment Agency chairman. “The money being turned over to fund state obligations was going to be used for local revitalization projects that would have improved our community, created jobs and stimulated our local economy.”
The Stanislaus County Redevelopment Agency announced this week it was forced to hand over $2.8 million for its share of the take. Kirk Ford, the County Redevelopment Agency executive director, said the state raid will force his agency to “modify, cancel, and/or delay planned activities.”
Specifically, projects to build storm drainage in Empire, water, sewer, and storm drains in the Parklawn, Airport Neighborhood, and South Seventh Street county islands, and community clean-ups countywide will be tabled. Additionally, infrastructure projects in unincorporated communities — including Denair — and economic development assistance programs will be put on hold.
“It’s incredibly narrow-minded of Sacramento to reach into the pockets of local redevelopment agencies, one of the state’s strongest job creating engines, at a time when job creation and economic development are desperately needed,” Ford said.
The Turlock Redevelopment Agency relinquished $3.3 million on Monday. An additional $686,565 is due next year, bringing Turlock’s total bill to nearly $4 million. The take will not impact the Carnegie Arts Center project or the renovation of the Joe Debely Stadium track and field, but could jeopardize the proposed $35 million Public Safety Facility.
Monday’s take proceeded as planned after a California Redevelopment Association lawsuit arguing the take is illegal failed in Sacramento Superior Court.
The CRA suit claims that state law allows redevelopment funds to be used solely for narrowly specified redevelopment activities within an agency’s boundaries. Additionally, the suit argues the raid could impair bond covenants and other contracts, in violation of both the state and federal constitution.
The CRA has not given up the fight, and is currently appealing the Superior Court ruling to the Court of Appeal. The Court of Appeal on May 7 denied a request for a temporary stay of the Monday take.
“Despite this ruling we continue to believe taking local redevelopment funds and using them to fund State obligations is unconstitutional. We have a strong case and feel confident the lower court ruling will be overturned by the Court of Appeal,” said CRA Executive Director John Shirey.
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