Board Agrees to Forgive New Cities' Debts, Despite Possible Lawsuit

By Bay City News Service:

Three cities indebted to Riverside County for providing them services when they couldn’t afford to pay will have their debts retired under a plan approved Tuesday by the Board of Supervisors, in spite of the prospect of legal action by another municipality that believes it has been shortchanged.

The Board of Supervisors voted unanimously to enter into debt forgiveness agreements with Jurupa Valley, Menifee and Wildomar. Even before the board vote, however, the city of Eastvale announced that it intended to sue the county to stop the action.

“There are disparities all over this thing,” incoming board Chairman John Benoit said. “It’s an imperfect solution, but I think we’ve got to move forward with it.”

The board ratified terms laid out in Senate Bill 107, one of the final budget measures signed by Gov. Jerry Brown in late September.

The bill centered mainly on the allocation of monies remaining following the dissolution of redevelopment agencies in 2011. However, a clause was included to provisionally credit Riverside County with $24 million toward its Cal Fire contract expenses.

The county, in turn, would have to agree to forgive debts that Jurupa Valley, Menifee and Wildomar incurred while transitioning to self-sustaining entities after incorporating.

All the cities have continued to rely on the county for law enforcement and fire protection, and for a while, each of them utilized other services, too, including road maintenance and repair.

The cities found themselves in a financial bind in June 2011, when Brown and the Legislature altered state law to dedicate more funding to cover expenses stemming from public safety realignment, which shifted many prior state responsibilities onto counties.

Specifically, Senate Bill 89 stripped away more than $20 million previously earmarked to cities that incorporated between 2004 and 2011 and deposited the funds into a law enforcement account from which grants would be obtained and awarded statewide.

Wildomar incorporated on July 1, 2008; Menifee on Oct. 1, 2008; Eastvale on Oct. 1, 2010; and Jurupa Valley on July 1, 2011 -- two days after SB 89 took effect. The nascent city was the hardest hit financially, losing half the funds anticipated in the budget for its first fiscal year.

Three attempts were made in the ensuing years to restore the lost money, but Brown vetoed every bill, citing budgetary concerns -- and inciting criticism that he was playing politics at the new cities’ expense.

Sen. Richard Roth, D-Riverside, shepherded two bills toward Brown’s desk this year -- Assembly Bill 113 and SB 25 -- which would have directly restored the municipalities’ lost funds, but Brown took no action. SB 107 was a last-ditch effort.

The bill granted authority to the California Department of Finance in the disbursal of the $24 million, and according to board members, no allowances were made for $5 million that Eastvale owes the county for services rendered between Jan. 1 and June 30 of this year.

Supervisor Kevin Jeffries noted that Eastvale had overcome its budget gap after the 2011 loss and had “played by the rules,” paying for county services until this year, when it apparently stopped in anticipation of receiving a credit on its original loss.

County Deputy Executive Officer George Johnson said he had contacted the Department of Finance several times, officially, to determine whether additional funding might be available to offset Eastvale’s obligations, and he received mixed signals.

The debt forgiveness compacts approved Tuesday by the board provide $21.32 million for Jurupa Valley; $1.14 million for Menifee and $1.18 million for Wildomar. All of that debt retirement, however, is contingent on the board receiving a Cal Fire credit from the state.

According to Eastvale spokeswoman Daniella McClister, the City Council met in closed session Monday and voted unanimously to sue Riverside County to stop the debt relief agreements from taking effect. City officials declined to say anything further.

According to county Chief Counsel Greg Priamos, the Department of Finance could resolve the matter by issuing a clear “interpretation that will ultimately result in a credit” for Eastvale.

“We’re at the mercy of the DOF,” he said. “We’ve simply followed the department’s direction.”

Priamos said that if the city continues to resist paying its bills for this year, the county would have the option of obtaining a court order demanding payment, or withholding property tax funds that would otherwise go to the city.

(Image via Shutterstock)