OC cities and county facing $268 million fiscal cliff

fiscal-cliffFor all the talk of the “Fiscal Cliff” in Washington, D.C. Orange County, and 19 O.C. cities and the  are facing their own version of a fiscal cliff that could cripple their general funds. The state Department of Finance has demanded payment of $268 million in unspent redevelopment agency funds targeted for low- and moderate-income housing.

The agencies had claimed that these funds were obligated for expenditure before the dissolution of redevelopment agencies across the state last year. While some cities, like Anaheim and Brea have already payed up, others are fighting the state’s demand. They claim the states calculations are incorrect.

The City of Santa Ana, which faces a demand of more than $56 million, has called a special meeting for today to discuss what they can do. Santa Ana, like many others, do not have that kind of money sitting around that can be sent to the state. This leaves the general fund as the only place for the money. Earlier this year, the Santa Ana City Council implemented budget reductions, funded in-part by the outsourcing of the City’s fire department, addressed a $30 million hole in the city budget. With those cutbacks, there is little left to cut, while maintaining city service levels.

One of the options that Santa Ana and others have is to file suit against the state and get a court injunction to stave off the bill. Such a maneuver is risky, since previous lawsuits regarding the dissolution of redevelopment agencies failed, resulting in the state Supreme Court ruling that not only could the agencies be dissolved, but that the legislation allowing cities to continue redevelopment agencies in any form was not valid.

  2 comments for “OC cities and county facing $268 million fiscal cliff

  1. cook
    December 21, 2012 at 1:28 pm

    If thoses funds were set aside for low income housing, and noit used, why doesn’t these cities have the funds in the bank?

  2. art lomeli
    December 22, 2012 at 11:55 pm

    Apparently some of the money the city claims has been spend and the council present at the emergency meeting stated will continue to spend on redevelopment projects.

    Seems this position is a violation of the Supreme Court ruling related to the dissolution of the Redevelopemnt Agencies and any resosolutions allowing cities to continue Redevelopement agencies in any form as in valid.

    After city negotiations with the State the State has concluded the city owes the State the 56 million and wants the unspent 56 million back. The city has voted not to give it back because they claim they have committed this money to developers. The State claims agreements they have reviewed through negotiation with the city disagree ……… Are not enforceable.

    The city argued at the emerncy meeting , the four votes , they will refuse to pay and will force the state to change their position through strong community advocacy and possible lawsuit . My perception is that the strategy is to get polical pressure through voter advocacy


    Seems that the cities concern is to continue the projects ……one , the Station District project , was heavily fought by developers and the city to get approval and let the State chip away at the debt by the State keeping property and sales taxes from the city.

    The cities budget will take a severe hit jeopardizing services while continuing the developer’s ability to continue with projects like the Station District Developement. Priorities????????

    The state has threatened criminal charges on city officials blocking the payments to the State. Possibly why Msrtinez, Amezcua and Tinajero avoided the emergency meeting.

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