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Local News

Judge Rules State Can’t Withhold Goleta Tax Revenues in RDA Dispute

The Department of Finance has questioned the use of $18 million in Redevelopment Agency funding for the San Jose Creek improvements

The money’s been spent and the project’s half built, but the City of Goleta still doesn’t know if it has to pay $18 million in a dispute over the San Jose Creek project.

When the city’s Redevelopment Agency was dissolved along with the rest, the state Department of Finance questioned the use of $18 million in RDA funds to build the San Jose Creek improvements.

The money is already spent, and the state tried to make the city pay it back — or just withhold tax revenues for a while.

A recent court ruling put a stop to that, at least until the city’s lawsuit against the state can be heard, said Valerie Kushnerov, the City of Goleta’s public information officer.

A Sacramento judge said the state can’t withhold tax revenues while the fight continues over Redevelopment Agency money, giving some relief while the city’s lawsuit waits for a court date.  The state can’t hold onto payments just because it believes a city owes it money, Judge Michael Kenney decided.

The Sacramento County Superior Court is swamped with similar cases from every jurisdiction in California that lost a Redevelopment Agency, according to Goleta city attorney Tim Giles. He said there are about 200 cases and only three judges who hear them, so the city could be waiting a long time for a hearing.

Late summer would probably be the soonest.

In the dispute, the state claims the Redevelopment Agency spent the $18 million inappropriately and has to give it back, so it can be redistributed to other taxing entities such as school districts and special districts.

City officials argue the money was spent properly and that the issue is centered on the timing of the money transfer, from the Redevelopment Agency to the city for the project. There’s also an issue with the state changing rules for which projects qualify for redevelopment funding, Giles has said.

If the city’s lawsuit is successful, it won’t pay a dime. If not, Goleta will probably have to work out a very large payment plan with the state, Giles said.

“For us, all of that money has gone into the San Jose Creek project; we paid the contractors out there,” he said. “So we don’t have $18 million sitting around.”

The San Jose Creek Capacity Improvement and Fish Passage project is nearly done with the first phase of work in the channel. It was important to get it finished before any significant rains come in.

Next up is the Hollister Bridge replacement and more work in the creek channel on the north side, near Hollister Avenue.

The Redevelopment Agency was created to fix flooding problems in Old Town Goleta, so those funds were given to the city for construction contracts from 2009 to 2011, Kushnerov said. Statewide RDAs were dissolved with a 2011 law.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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