Manteca has more than $40 million it might be able to use to stimulate job growth or provide affordable housing.
It’s money from the receipts of bonds sold by the now defunct Manteca Redevelopment Agency for specific purposes such as financing freeway interchange improvements along the 120 Bypass and infrastructure essential to attract large employment centers.
Seven months ago no one expected the money to be in limbo. The focus of RDAs up and down the state as well as the California Legislature was on how the state’s high court would rule on the constitutionality of the governor being able to seize a part of the annual RDA property tax stream to help plug the state’s budget gap. No one even thought that the court would strike down a provision that essentially said RDAs could continue to operate if they agreed to give up a part of future property tax to the state. The court ruled “pay to play” didn’t pass constitutional muster.
That literally put the status of billions of dollars in question.
The California Department of Finance has interpreted provisions of the enabling legislation that pulled the plug on RDAs allowing projects in contracts to continue to move forward as not including any funding not tied up in a binding contract as of a certain date.
But challenges to that interpretation note that an implied contract exists when someone lends money for specific purposes through the act of buying bonds. If the state simply takes that pool of borrowed money yet to be spent and adds it to other deficit reducing efforts the bond holders basically invested money not for infrastructure but a one-time effort at covering the state’s deficit.
At the same time, that would mean those paying property taxes within an RDA area committed to debt repayment could be paying up to 25 years for money that was used as a one-time shot at essentially supporting state bureaucrat salaries.
City Manager Karen McLaughlin noted the Manteca RDA successor agency is still has possession of the $40 million plus until a final determination is made of the state’s ability to seize the borrowed funds.
The state has already diverted RDA property tax collections into their coffers minus what individual RDAs need to cover ongoing debt obligations that are under contract and certain specific administrative expenses.
The state law that created RDAs required them to go into debt by borrowing money against future property taxes instead of pooling property taxes as they went along to eventually pay for affordable housing and projects providing economic growth.