SAN FRANCISCO — California is having a hard time collecting all of the money it wants from former redevelopment agencies, as some municipalities are disputing the state’s tallies.
They are fighting over how much money is owed in the wake of the termination of all the state’s redevelopment agencies following 2011 legislation and court decisions.
The state said 27 local governments have not paid or have underpaid redevelopment tax money, handing over only a little more than 5% of the $129 million California believes it is owed, according to the Department of Finance.
Most of the “successor agencies” that took over the obligations for the state’s former 400 redevelopment agencies have paid their bills.
The most delinquent successor agencies owe more than $10 million to the state and include San Jose, Santa Cruz County, Brea and Chico, the Department of Finance said.
Many of the municipalities question the state’s payment calculations and already about a dozen municipalities are suing over the redevelopment payments.
“It really comes down to a difference of the presentation of the materials,” said Julia Cooper, acting director of finance for San Jose. “We have had the county-auditor controller and the state controller both verify there are insufficient funds in San Jose to make all of its obligations.”
California said that San Jose is the biggest offender, owing $39 million for its former redevelopment agencies.
City officials said most of that money went to pay debt service on bonds issued by the city’s former redevelopment agency.
Cooper said finance officials are reviewing the city’s obligations. She added that San Jose had made all of its debt service payments on the senior and junior debt owed by its former agencies, as well as payments on bonds backed by the general fund.
Department of Finance spokesman H.D. Palmer repeated what Gov. Jerry Brown’s administration has said all along — the redevelopment payments required by the state will not interfere with debt service.
“We have never denied any requests to use property tax revenue for bond payments,” Palmer said. “The [state] Supreme Court last December cited that property taxes are disbursed to cities, counties and special districts only after standing obligations have been met, and clearly a bond obligation is a standing obligation.”
The state Supreme Court last year upheld a law dissolving California’s redevelopment agencies.
Since then, there has been a scramble by the so-called successor agencies — in most cases, the municipalities that created redevelopment agencies — to tally their debts and assets and to make the payments.
The state budget assumes $3.1 billion in savings from the end of redevelopment because money that used to go to redevelopment agencies is expected to flow to other local agencies, primarily school districts.
Dollars that school districts receive from local property taxes reduce the state government’s school funding obligation by the same amount.
A bill passed in connection with the state budget in June attempted to clarify some of the uncertainty surrounding the shutdown of redevelopment, but many municipalities complained it made things worse, with some saying it made it harder to cover debt service.
The new law clarified that the successor agencies’ payments to other local taxing entities, such as schools and fire districts, had to include tax-increment revenue going back to December 2011, increasing the total for some agencies.
The bill also set fines and the potential withholding of sales tax payments for delinquent successor agencies.
Finance officials have said they would not penalize the successor agencies for missed payments until September.
Successor agencies are allowed to dispute the payments they make, which will be then reviewed by the Department of Finance.
The potential impact on debt service by the dissolution laws recently spurred bond insurer Syncora Guarantee Inc. to sue the state.
Syncora said the new laws impair debt service and bondholder rights.
