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Council Tackles Agency Problem
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Again taking up the Riverbank Redevelopment Agency issue on Sept. 26, city council members tried to keep their options open and their chance of maintaining a redevelopment agency possible until the courts reach a decision in January.

The city agreed to pay the state "a ransom" of $248,000 on behalf of the Agency for this financial year but only on condition the Agency agrees to repayment, the state Supreme Court rules the Governor's bills on redevelopment agencies constitutional and the City and Agency decide to continue with a voluntary agency.

City Treasurer Marisela Hernandez told the council she required this conditional remittance payment agreement only to allow her to include the remittance payment on an annual debt statement for the Stanislaus County Auditor Controller's Office required by Oct. 1. By not including the remittance payment as debt, the Agency may not be able to recover these funds and therefore become unable to repay the city.

The vote was 4-1 with Councilmember Jesse James White voting against the motion for approval.

Citizen Charles Neal again scolded the council for even running the risk of incurring further debt. This year the Agency has been unable to pay local agencies such as the schools, fire and police the pass through taxes for which it contracted and will not be able to do so next year, he said; the city owes the county $400,000 and cannot afford to repay that loan; and in 1992 its citizens voted to reject creating a redevelopment agency.

The city formed the Agency as a method of using increment taxes on raised valuation to improve blighted areas of the city and construct projects such as the downtown Plaza del Rio and surrounding improvements to infrastructure, street, pavements and street furniture. These have enhanced the downtown. But the Agency fund also paid for purchase of the Del Rio Theater for conversion to a cultural arts center but the building was subsequently found to be structurally unsound and is now abandoned.

With the nationwide economic downturn, property valuations and tax increments have plummeted and the Agency must still try to make bond payments of about $1 million each year on the $15 million it borrowed in 2007.

Hernandez reminded RDA members the Governor signed AB 126 and 127 in June that at once suspended redevelopment agencies and dissolved them statewide but allowed those whose legislative bodies such as city councils were willing to make "voluntary" payments to the State to keep their agencies in operation.

The League of California Cities and California Redevelopment Association have filed lawsuits in state Supreme Court challenging the bills' constitutionality and those are due to be heard in mid January.

Hernandez also reported she has appealed the $248,000 figure to the Department of Finance as being too high because it is based on the Agency's 2008-2009 tax increment but so far has received no reply.