Stockton’s pending decision to pull the plug on its redevelopment agency has gotten the attention of Manteca’s elected leaders.
Manteca City Manager Steve Pinkerton told the council during their meeting Thursday that Stockton was shutting down their RDA to avoid it from eating into the general fund.
That prompted Councilman John Harris to ask if the Manteca RDA was in danger of eating into the Manteca general fund as well.
Pinkerton said that would be the case “in possibly five years” if the state continues to take money from redevelopment agencies. He said staff would continually monitor the situation.
Manteca is not in the same situation as Stockton. Manteca still has a cash flow cushion between obligations and its property tax revenue. Manteca also has reserves in excess of $50 million that are committed for various projects that are yet to be spent.
A lack of a substantial reserve and a drop in property assessment combined with the state seizing funds has crimped the Stockton RDA. When an RDA folds under the rules put in place by Gov. Jerry Brown, existing obligations for bonds and other contractual obligations continue to be funded until they are paid off or terms expire.
The council met Thursday to finalize documents they needed to have in place to continue to operate the Manteca RDA by paying the state the money they demanded to help Sacramento balance this year’s state budget.
The legislature required RDAs up and down California to fork over $1.7 billion collectively if they didn’t want the state to shut them down, seize all of their funds and take over property they own and sell it off. Manteca’s share this year is $5.8 million. In subsequent years the Manteca RDA will pay the state $1.2 million annually in exchange for continuing to be allowed to exist.
That means a number of Manteca property owners who are paying taxes to cover RDA loans that generated funds for the city to invest in infrastructure and economic development instead will be spending the next 20 years paying taxes to retire the loans that will be used by the state to cover just the current fiscal year shortfalls for everything from state employees’ salaries to entitlement programs.
The California Supreme Court, though, has agreed to hear a challenge to the constitutionality of the state’s move. The lawsuit was filed by the League of California Cities and California Redevelopment Association questioning the constitutionality of the state’s move against RDAs. Manteca is a member of both groups. The City Council has gone on record supporting the legal action.
The court is expected to make a ruling by the end of December.
Meanwhile, the state is barring all RDAs from entering into new contracts for economic development or to build affordable housing before Jan. 1, 2012.
The Manteca RDA collects $15.6 million a year in taxes. Some $3.1 million is set aside for state-mandated affordable housing while $8.5 million is dedicated to debt service. That leaves $4 million that goes into projects and operations.
The state has given RDAs the flexibility to not put money aside for one year for affordable housing in order to make the payment to the state.
The Manteca RDA had a balance of $76.7 million in borrowed funds as of July 1, 2010. It has been drawn down during the past 13 months for various projects. The remaining balance is committed to numerous projects ranging from interchanges to community improvements.