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Old 11-14-2010, 07:03 AM
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Default Prop. 22 won't stop state's May funds raid Cities still happy this will be last one J

Prop. 22 won't stop state's May funds raid

Cities still happy this will be last one

James Rufus Koren, Staff Writer


Although state voters this month approved a measure that will prevent the state from taking or borrowing money from local governments, local redevelopment agencies will still have to pay millions to Sacramento in the spring.

Agencies in San Bernardino and east Los Angeles counties will owe a combined $39 million in May.

"The only way to reverse that is if we win in court," said John Shirey, executive director of the California Redevelopment Association, which has sued to stop the state from taking local funds. "Our members should still prepare to make those payments. I wish I had better news for them."

While Proposition 22, which voters approved this month by a wide margin, will stop the state from taking local redevelopment agency funds in the future, it won't stop this particular raid. Shirey this past week sent a note to CRA members to make that clear, saying he'd been asked several times if Proposition 22 affected the upcoming take.

"I just felt there was enough confusion that we should put out a clarification," he said.

When payments are due to the state in May, redevelopment agencies in Fontana and Rancho Cucamonga, which are among the largest in the state, will have to pay $6.9 million and $6.6 million, respectively. San Bernardino's agency will owe $2.5 million, and Redlands will owe $491,000.

But even though they'll have to shell out millions to the state in May, local redevelopment agency officials hail Proposition 22's passage as a big win for locals.

"We do recognize this is something outside of Prop. 22," said Linda Daniels, deputy city manager in Rancho Cucamonga. "But we're very happy Prop. 22 passed."

Redevelopment officials say the measure will allow them - for the first time in more than a year - to plan and budget with confidence, knowing the state won't be able to raid their funds later.

"If this is the last, then it is something to celebrate," said Lisa Strong, management services director for Fontana. "We at least have something to look forward to. ... If we have to make a $7 million payment to get to that point, I guess so be it. But it will be nice to be able to plan again."

In September 2008, the Legislature passed a bill calling for a raid of redevelopment funds. A judge called the plan unconstitutional and struck it down. In July 2009, lawmakers tried again, this time changing the plan in a way that seemed to pass legal muster.

While the CRA has fought the plan, redevelopment agencies have been under the assumption their funds would be taken since July 2009. Strong said that makes it hard to plan projects - big and small - over the long term.

"How do you plan when you don't know whether the other shoe is going to drop?" Strong said.

Had the state not planned to take redevelopment money, Strong said Fontana would have been able to use some of the $33.5 million it paid to the state in May to begin work on a new interchange.

"We would have been doing projects sooner, we would have been putting people to work sooner," she said. "Now, we'll be doing smaller projects, or we'll be saving up for a larger project down the line. We could be waiting a few years."

Oscar Orci, director of development services in Redlands, said if Proposition 22 hadn't passed, redevelopment agencies would have been living under the threat of future state raids.

"This allows us more confidence to program our funding without the uncertainty of losing some," Orci said.

He said he wants to create a long-term plan for economic development and blight-removal in Redlands, and that Proposition 22 should help give the Redevelopment Agency the financial security to make such long-term plans.

"It assists us in having the certainty that we'll have the resources available for some of these efforts," he said.

Proposition 22 is retroactive, overturning any state raids approved by the Legislature after October 2009.

In July 2009, state lawmakers approved a budget plan that called for taking more than $2 billion from local redevelopment agencies in 2010 and 2011. Because that plan was approved before the cutoff, redevelopment agencies are planning to make a payment to Sacramento this spring.

Most of money - $1.7 billion - was paid in May. An additional $350 million will be paid in May 2011.

The CRA is appealing a court ruling that said the state's raid is legal, but Shirey said the appeal might not be resolved for quite some time.
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