The first distribution of property tax dollars to schools, cities, special districts and the county resulting from the state-mandated redevelopment wind-down process was made today to the tune of about $13.2 million, according to Santa Clara County officials.
The county’s auditor-controller, who oversees a trust fund set up by the state law that dissolved redevelopment agencies as of Feb. 1, made the payment to fund more basic services, said a press release from the county.
“Today marks the first distribution of funds to local agencies that were adversely affected by diversions of property tax revenues to redevelopment agencies,” the press release states. For decades, these property tax increment funds went to the RDAs which used to the money to improve blighted properties with construction projects and to promote economic development.
Initially, the funds formerly collected by the RDAs – about $22 million per year in Morgan Hill – will be used to pay off existing RDA debts and contracts, obligated “pass-through” payments to local governments and agencies, and administrative costs of the RDAs’ respective successor entities.
The $13.2 million paid to local agencies today represents the leftover former RDA funds following the first round of obligation payments, the press release said. Most of that money will go to schools. For example, Milpitas Unified School District is expected to receive over $3 million and San Jose-Evergreen Community College over $500,000.
In Santa Clara County, there are nine former RDAs, established by the cities of Campbell, Cupertino, Milpitas, Morgan Hill, Mountain View, San Jose, Santa Clara, and Sunnyvale, and the Town of Los Gatos. Each jurisdiction became the “successor agency” responsible under the law for directly winding-down each former RDA. One of the successor agencies, Cupertino, has already taken steps to rapidly wind-down its affairs, saving the other local governments significant administrative costs, according to the press release.
“To get to this point, county staff and staff from each of the successor agencies have worked diligently to create, audit, and certify the schedules of enforceable obligations of each former RDA,” said Vinod K. Sharma, County Director of Finance. “Only through the tireless effort of all parties have we been able to timely implement the law.”
For the largest former RDA, San Jose, the picture is somewhat clouded, the press release said. On May 1st, San Jose informed the county auditor-controller that San Jose has insufficient funds to pay all of its debts. Under the state law, this situation triggers a different procedure for distributions from the trust fund and requires the state controller’s concurrence. Consequently, distributions from the San Jose trust fund are on hold. The county auditor-controller is proactively seeking the state controller’s concurrence and will distribute the funds as soon as legally possible.
To assist San Jose while it tries to determine how to move forward, the county will create a $10 million reserve and continue conversations with the city over how the county might be able to provide assistance to the city in meeting the former RDA’s substantial debts, including millions owed to the county, according to county staff.
“While the county has faced enormous and painful budget cuts, we are also committed to working with San Jose on legally-permissible solutions that can help the city deal with the former RDA’s crushing debt burden,” said County Executive Jeffrey V. Smith.
