The California State Supreme Court issued a stay on an important piece of legislature that could eliminate redevelopment agencies statewide. Filed by the League of California Cities and the California Redevelopment Association, the suit would stop Assembly bills 26 and 27 from taking effect.
Sometimes called the "extortion bill," AB 27 requires cities that wish to keep their redevelopment agencies to "voluntarily opt into mandatory payments to preserve agency status." Under the bill, Danville would have to pay the state $837,877 for first year (2011-12) and approximately 23.5 percent of that amount each year thereafter, or a little over $200,000 beginning in 2013.
"We're very disappointed to lose the redevelopment agency option and there's no question with the strings they have put on it…. you're between a rock and hard place," said Mayor Karen Stepper.
This latest development in Sacramento provides a glimmer of hope for town officials, who until Thursday afternoon were discussing filing an appeal to change the amount of money they would have to pay the state each year. Town Manager Joe Calabrigo said the basis of the appeal is the misdesignation of funds paid to the town by its redevelopment agency in 2008.
"It just so happens that 2008 and 2009 was an unusual year in which the agency paid an extraordinary amount of interest, but the redevelopment agency wasn't credited for that because on the forms that were filed with the state, it was reflected as a transfer and not an interest payment," he said.
During that fiscal year, which the state used to determine financials in AB27, Danville's redevelopment agency paid interest on a loan from the town, which now needed money to begin work on the Veteran's Hall.
"We're not sure whether they would credit us with that amount our not, but given the potential for the amount that has to be voluntarily produced to the state, it's worth looking into," Calabrigo continued.
Although the Supreme Court's stay on AB 27 has put Danville's appeal plans on hold, Calabrigo said the town will reserve the right to use previous plans to bridge the agency's deficit should the stay fall through.
"We're anticipating that, combined with lower than anticipated tax revenue, the agency will loose about $900,000 in net in 2011-12 and the town's general fund will need to offset that dollar amount," Calabrigo said.
The Town Council began looking into alternatives to offset the difference on Tuesday. While they didn't take any action, the council will look at operating and capital expenditure reductions including removal of three positions and an investment reduction in several projects.
"We're moving forward and preparing for the worst case, the need to comply with the bills that the governor has signed into law," said Calabrigo, adding that the potentially reduced positions are currently vacant.
Other reductions would include the loss of new trashcans in downtown, a 10 percent reduction in park facilities transfers and a payment plan for a $500,000 investment in the San Ramon Valley High School pool.
Despite being in limbo, Calabrigo said the council would reconvene on Friday afternoon for a briefing and to discuss the next steps. The town will no longer have to file an appeal by Aug. 15.
"We're pleased to see that the state Supreme Court has decided to take the case and determined that they want to see the case briefed the case fairly quickly and…determined by Jan. 15, 2012," he said.