Faced with the Governor's drastic modification of redevelopment law, Riverbank City Council members sitting as the local Redevelopment Agency (RDA) chose on Aug. 22 to keep its agency on a voluntary basis at least until the second meeting in September, and possibly as late as January.
The vote was 3-2 with agency members Richard O'Brien and Jesse James White voting to drop Riverbank's RDA at once. Its debts must still be paid after it is handed over to the County of Stanislaus or such other agency as the State approves.
The voluntary program act requires making annual contributions to local schools and special districts that in Riverbank's case will require payment of $247,000 this year and lesser amounts determined by the Department of Finance in subsequent fiscal years, said City Treasurer Marisela Hernandez in explaining the complicated subject to Agency members.
While the Dissolution Act will suspend all redevelopment agencies and their activities as of Oct. 1, unless they join an "alternative voluntary redevelopment program," the ultimate decision may rest with the courts and not occur until early 2012.
Both the California Redevelopment Association and the League of California Cities have indicated their intent to challenge the validity of the Act in court and the League wants to have the lawsuit heard first by the California Supreme Court that could impose a stay order.
Currently, the Riverbank RDA is in serious financial trouble due to continuing decline of property tax increment revenues as well as increasing debt service costs, Hernandez told the Agency. Assessed valuation and therefore tax increments have dropped by 44 percent and she did not see any turnaround in the near future. On these grounds she has appealed the amount of Riverbank's assessment or "ransom" payment to the Department of Finance.
She is projecting a shortfall in revenues necessary to pay the current year's debt service and may have to use funds drawn from the bond reserve, thus technically defaulting on the bonds.
Resident and former council member Charles Neal was more blunt in his choice of words, telling Agency members they don't have the money to pay their debts, the financial situation will not improve soon and they should give up the Agency while they have a chance of Stanislaus County taking it over.
The Agency's outstanding debts total $28 million, he noted. In the case of the City of Riverbank alone, the Agency owes almost $250,000 to the general fund at a time when the city is cutting pay for its employees.
Mayor Virginia Madueno said the current situation is very confusing, changing every day and she said it's best to keep their options open as long as possible, especially since there are many unanswered questions. In the case of the Del Rio building, for example, purchased with Redevelopment Agency funds but later transferred to ownership by the city, it is even unclear whether that transfer was legal. And does the redevelopment situation preclude the city going ahead with the building's sale or demolition? It is questions like that that city officials hope to have answered before making a final decision.
The vote was 3-2 with agency members Richard O'Brien and Jesse James White voting to drop Riverbank's RDA at once. Its debts must still be paid after it is handed over to the County of Stanislaus or such other agency as the State approves.
The voluntary program act requires making annual contributions to local schools and special districts that in Riverbank's case will require payment of $247,000 this year and lesser amounts determined by the Department of Finance in subsequent fiscal years, said City Treasurer Marisela Hernandez in explaining the complicated subject to Agency members.
While the Dissolution Act will suspend all redevelopment agencies and their activities as of Oct. 1, unless they join an "alternative voluntary redevelopment program," the ultimate decision may rest with the courts and not occur until early 2012.
Both the California Redevelopment Association and the League of California Cities have indicated their intent to challenge the validity of the Act in court and the League wants to have the lawsuit heard first by the California Supreme Court that could impose a stay order.
Currently, the Riverbank RDA is in serious financial trouble due to continuing decline of property tax increment revenues as well as increasing debt service costs, Hernandez told the Agency. Assessed valuation and therefore tax increments have dropped by 44 percent and she did not see any turnaround in the near future. On these grounds she has appealed the amount of Riverbank's assessment or "ransom" payment to the Department of Finance.
She is projecting a shortfall in revenues necessary to pay the current year's debt service and may have to use funds drawn from the bond reserve, thus technically defaulting on the bonds.
Resident and former council member Charles Neal was more blunt in his choice of words, telling Agency members they don't have the money to pay their debts, the financial situation will not improve soon and they should give up the Agency while they have a chance of Stanislaus County taking it over.
The Agency's outstanding debts total $28 million, he noted. In the case of the City of Riverbank alone, the Agency owes almost $250,000 to the general fund at a time when the city is cutting pay for its employees.
Mayor Virginia Madueno said the current situation is very confusing, changing every day and she said it's best to keep their options open as long as possible, especially since there are many unanswered questions. In the case of the Del Rio building, for example, purchased with Redevelopment Agency funds but later transferred to ownership by the city, it is even unclear whether that transfer was legal. And does the redevelopment situation preclude the city going ahead with the building's sale or demolition? It is questions like that that city officials hope to have answered before making a final decision.
