Politics & Government
Mafia Tactics? City Sends $2 Million in Redevelopment Funds to State
The mayor likens the state's actions to those of gangsters; the funds needed to be shifted to avoid significant financial penalties, but the state says local schools will benefit.
With a gun pointed to its head, Coronado agreed at a special meeting Thursday to send California a check for nearly $2.4 million.
The money is due by 5 p.m., after a demand from the state Director of Finance on Monday.
The threat stems from the state's end to local redevelopment agencies. The fallout from has left leaders in several cities confused and frustrated, and a number are threatening to sue.
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Had the money not been paid, the City Council – which is acting as the successor agency to wind up the business of its redevelopment arm – would have left the agency to face a 10-percent penalty, plus 1.5 percent interest per month.
The state also threatened to withhold all property and sales tax revenues owed to the city.
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“The state is claiming that cities were paid too much during the period when ,” Councilwoman Carrie Downey said.
In what amounts to a funds shuffle, though, the money is set to be shifted to Coronado schools. The state will turn over these “overpayments” to other taxing authorities, in Coronado's case, the school district, come Monday morning.
In Coronado, redevelopment funded a number of projects, from renovations of aging schools to upgrades at Sharp Coronado Hospital.
The agency put $5.8 million from the state into a reserve account to pay its debt obligations on those projects from July-December of 2011. It then received $8.2 million from the state to cover debts for the first half of this year.
The state now claims it overpaid the agency.
“In fact, the $5.8 million shown on the (payment schedule) was the amount the Successor Agency needed over and above the $8.2 million …” City Manager Blair King wrote to Assemblywoman Toni Atkins, protesting the state's demands.
The council voted unanimously to cut the check, but did so under protest. A displeased Mayor Casey Tanaka said this week it's like he's “been watching The Sopranos.”
“Apparently our state is run like the Mafia,” he said.
The money will come from affordable housing accounts, but losing the funds will deplete those reserves and leave the city vulnerable to default on some loans.
The agency originally had planned to use the reserves to make mortgage payments due in 2013-2014 and beyond.
“We've got a balloon payment due to the Housing Authority. If we don’t have the money we are not going to pay it,” Downey said.
By “we” she meant the successor agency, not the city. She and King both stressed that the city is not incurring more debt.
Coronado is not alone. The state has sent similar letters to other cities and distributing the money to other local agencies. San Diego received a demand for $69 million, Chula Vista for $5.5 million, Poway for $3.4 million and La Mesa for $1.9 million.
