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Monday, December 24, 2012

Paying for Redevelopment's Funeral

Posted By Carrie Peyton Dahlberg on Mon, Dec 24, 2012 at 11:11 AM

All three of the Humboldt county cities that once had redevelopment agencies have been tussling with the state over how much money they should have to hand over and when, with millions of dollars at stake.

Arcata was told it owes $2.4 million, and it has only paid a little over $300,000, the Arcata Eye reported last week.

Meanwhile, Eureka also is being told it needs to turn over a similar amount, outgoing city manager David Tyson said in an email on Friday.

"I think just about every former RDA [redevelopment agency] in the state is in a similar position as Arcata," he wrote, although from Eureka's point of view, "we are not in 'dispute' with the state over the monies we are required to turn over as a result of the dissolution of redevelopment."

The issue has been contentious, though, and cities have not been quick pay the money the state says they owe, according to Humboldt County Auditor Joe Mellett, who is charged with keeping track of the various collections.

"The state is saying all right, we've had these audits, and we believe you need to disgorge X amount of dollars. And the cities are saying no, we don't have the money," Mellett said over the phone Monday morning. "They're trying to honor their commitments to their citizens to slow things down as much as they can."

If the state decides they are delaying too long, it can impose penalties.

It wasn't immediately clear how much money the state currently says is in arrears from each city. The state Department of Finance's external affairs office did not return a call on Friday.

The money at stake involves taxes that once flowed to redevelopment agencies, but now are supposed to be used two ways: paying off redevelopment agency debts, and then going back to local governments, schools and special districts that would have gotten the tax money in the first place if there were no redevelopment agency.

That's where it gets a little tricky, though, said Mellett. Schools are supposed to get a lot of the returning funds, but it isn't a windfall for the schools, because the state simply cuts its funding by an equivalent amount, he said. So it is the state, not the schools, that comes out ahead financially, he said.

As redevelopment agencies are dismantled, the money they once collected is moving among many different funds, including ones involving low income housing. For that pot of money, a Dec. 15 demand letter on the state Department of Finance website says that Fortuna owes $1.29 million. Another letter dated the same day outlines Arcata's $2.4 million obligation.

Fortuna paid $1.29 million in late November, according to Mellett.

Letters to those cities appear to have been written after a meeting among the parties to talk over differences, and no similar letter for Eureka is online. In what appears to be an earlier stage of correspondence, a Nov. 9 letter on the state finance website says Eureka owes $653,897.

That's exactly the amount Eureka paid with a check dated Dec. 21, according to Mellett.

While the process has been slow and sometimes tense, he said, "the cities are not going to go bankrupt over this, and the state is not trying to bankrupt them."