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State swiping $1.3M from Manteca RDA

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POSTED February 2, 2009 3:52 a.m.
California’s continuing budget crisis could undermine efforts to provide affordable housing in Manteca as well as force the city to borrow money from an internal account to keep street maintenance crews working.
The California Legislature – with Gov. Arnold Schwarzenegger’s approval – has already authorized a $350 million one-time shift of redevelopment agency money to the state’s general fund coffers. That was done in September and before the deficit started growing. California now has a projected $42 billion deficit over the next 20 months.
The RDA hit already approved will cost Manteca $1,370,731. It is throwing a monkey wrench into Manteca’s effort to provide low to moderate income housing projects as 20 percent of RDA funds are set aside for such purposes.
Manteca RDA has spent – or is committed – to spend $14.6 million on various affordable housing projects. That included two projects through Eden Housing (Almond Terrace for seniors and Union Court for low-income families) for $4.2 million; Affirmed Housing (senior complex being developed behind Dribble’s Car Wash on North Main) for $2.7 million, Satellite Housing (for independent living apartments for mentally handicapped adults along Airport Way) for $1.7 million, and Mid Peninsula Housing (low income housing planned at Woodward Avenue and Airport Way) for $2.5 million.
Since 2002-03, the Manteca RDA has provided $2.2 million in down payment assistance loans for first-time home buyers and $1.5 million in rehabilitation grants and loans.
Manteca RDA currently has the tax increment reserves to absorb the hit. The concern is what will happen if the state again decides to raid RDA funds plus if the prices of existing homes located in RDA territory continue to plummet. Powers Tract, for example, has seen escrow closing prices plummeted by close to $150,000 on an average home in 2008 compared to two years earlier. That translates into a $1,500 loss in property taxes of which a large chunk goes to the RDA.
The California Redevelopment Agency has filed suit to block the legislative action raiding RDA tax receipts. The hijacking is being challenged on two points:
• Article XVI, Section 16 of the California Constitution states redevelopment funds can only be used for specific redevelopment activities. That would mean the state can’t borrow or take the money to balance the budget.
• The same section of the state constitution authorizes RDA agencies to irrevocably pledge RDA revenues to pay back bond obligations necessary to fund RDA projects. By permanently shifting funds that are pledged to pay back bond debt, the move by the state impairs the constitutional rights of existing bond holders.
State delaying payment
of revenues cities
are entitled to receive
The state Department of Finance is recommending a seven-month deferral of revenues collected via the highway users’ tax starting in January 2009. The city uses the funds to pay for street operations. `In order to continue funding street personnel and on-going street maintenance the city will need to borrow funds internally from another transportation fund.
The amount of revenue being deferred is estimated at between $425,000 and $450,000.
The state is also planning a three-month deferral of the last quarterly payment from Proposition 42 passed years ago by voters to help fund local road maintenance. The city uses Proposition 42 funds to pay for the annual overlay of streets. This means the city will either have to scale back overlay projects or delay them.
The current state budget crisis materialized after the 2008-09 budget passed in September. That budget assumed general fund revenues that were $14.5 billion higher than what is actually occurring. The sharply lower revenue estimates reflect the state’s declining economy.
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