CITYWIDE — The California Department of Finance is staking claim to roughly $50 million in cash that once belonged to the former Santa Monica Redevelopment Agency, city officials said Wednesday.
The state also threatened an additional $89.8 million worth of property, claims it has remanded to the California Controller’s Office for review. That comes on top of claims in March that the city’s Successor Agency, the legal entity that took over assets of the Redevelopment Agency, owed over $30 million for various affordable housing projects.
This time, the state appears to be trying to “claw back” $49.4 million in cash from cooperation agreements created between City Hall and the Redevelopment Agency between January 2003 and September 2010.
It originally wanted to invalidate a full $126.1 million worth of cash promises, but $76.6 million of that total came from restricted funds, which could not legally be distributed to other taxing entities, according to a letter from April 1.
It also took aim at the property transfers conducted on March 9, 2011, saying Thursday that a law passed by the Legislature prohibited the “wholesale transfer” of properties from redevelopment agencies to other parties, including cities.
Instead, it sets up a process by which agencies are supposed to develop a long-range property management plan that addresses the fate of those assets, finance officials said Thursday.
A complete list of assets in Santa Monica sent by the Department of Finance to the State Controller’s Office for review was not available by presstime.
“The city may not like (it), but it is irrelevant whether they like what the law says or not,” state officials responded in an e-mail to the Daily Press Thursday.
The City Attorney’s Office did not agree.
In a letter dated April 8, City Attorney Marsha Moutrie stated that the state had no right to try to claim cash, take property or invalidate agreements between City Hall and its Redevelopment Agency, which formed before legislation unraveling redevelopment agencies across California — called AB 1x 26 — took effect.
In the eyes of City Hall, that effective date is Feb. 1, 2012, when redevelopment was officially ended by a California Supreme Court decision on two pieces of legislation, AB 1x 26 and AB 1x 27.
That decision created a worst case scenario for cities like Santa Monica by first killing redevelopment agencies and then prohibiting cities from paying what some called “ransom” to keep the entities open for business.
That left the state government and local municipalities to figure out how they would disburse assets to taxing entities like school districts and counties that would have otherwise received the funds had the redevelopment agencies not existed.
The process outlined in AB 1x 26 was murky at best, and the Legislature tried to clarify in yet another bill, Assembly Bill 1484, although few in local government would say that helped.
Specifically, the bill gave permission for the Department of Finance to divert sales and property taxes from cities if the successor agency to the redevelopment agency — whether or not that’s the city government — refuses to give back money that the state finds is owed.
The League of California Cities, an association of city officials, filed suit in September 2012 contending that “claw back” provisions violate state law because AB 1484 was not approved by a two-thirds vote of the Legislature and it improperly changes the use of local taxes.
Oral argument on that suit is set for today, April 19, according the League of California Cities.
Through April 8, 88 cases have been filed in connection with the legislation, including one by City Hall, its redevelopment successor agency and Community Corporation of Santa Monica, the largest developer of affordable housing in the city.
Although Gov. Jerry Brown’s original intent in dissolving California’s redevelopment agencies was to close a hole in the budget, direct monetary benefits of the move have dwindled as the process continued.
The Legislative Analyst’s Office, an independent group that provides nonpartisan fiscal and policy analysis for the state legislature, released a document in January stating that Brown had overestimated the amount of money the state would get back from redevelopment agencies by almost one-third.
The budget assumed that the state would reclaim $2.1 billion in the 2012-13 year and another $1.1 billion in 2013-14. The real numbers look to be $1.6 billion short of what was assumed in the 2012-13 budget, according to the document.
New information will be available after the governor issues his revised budget in May, said Brian Uhler, spokesperson for the Legislative Analyst’s Office.