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Lawsuit Results Over Disbursement of Redevelopment Monies

Posted by on May 31st, 2012 and filed under News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

By Ted AYALA

Ratcheting up the tension over the end of redevelopment agencies, Glendale and Pasadena joined Culver City, Palmdale, Huntington Beach, Imperial Beach, Inglewood, National City and Hayward in suing the state over debts left behind by the loss of redevelopment funds. The lawsuit sought to ensure that the state honors its commitment to pay off all enforceable obligations left behind with the close of redevelopment.

A temporary restraining order submitted by the same parties was dismissed by Judge Timothy M. Frawley in Sacramento Superior Court on Wednesday afternoon. The injunction, had it passed, would have prevented the disbursement of monies culled from shuttered redevelopment agencies to schools.

According to the copy of the lawsuit that was filed on May 22 in Sacramento County Superior Court, AB 26, the state bill, which dissolved redevelopment agencies throughout the state, “did not dissolve the existing enforceable obligations of the former redevelopment agencies, all of which must still be timely paid by the successor agencies.”

The state has assured cities affected by AB 26 that money will be forthcoming to pay off their redevelopment debts beginning June 1. But with the deadline edging ever closer and citing contradictory statements from the state, cities are expressing worry.

“The State Department of Finance has recently issued conflicting statements, raising significant concern that cities will not receive the funding they require to meet their ‘enforceable obligations,’” stated city spokesperson Tom Lorenz in a press release.

Failure to obtain the promised funds from the state will leave the finances of affected cities in disarray, forcing them to take drastic measures such as instituting massive lay offs in order to stave off a default.

H.D. Palmer, spokesperson for the state’s Department of Finance, said that the agency would defend its right to control redevelopment payments. He also cited the state’s Supreme Court as being the instigator of the delays in payment, pending while the court reviewed the legality of cutting redevelopment.

Glendale, which had originally asked for $34 million in its request for redevelopment payments, will only receive $22 million – $12 million less than had been requested. A combination of revenue shortfalls and the sudden end of redevelopment has forced the city and others like it to more extreme measures to save money. Included among them is a wave of lay offs set to take place in June. The city earlier this week approved a measure that would allow certain employees the option to retire early instead of having to face a lay off.

“There is no plain, speedy, or adequate alternative remedy and the denial of property tax funds to which the successor agencies are entitled for the payment of enforceable obligations will cause them irreparable harm,” said the lawsuit. “Time is of the essence. Without the required distributions to the successor agencies [they] will be unable to pay the required enforceable obligations and be forced into defaults that will damage bondholders, credit ratings, and creditors.”

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