May 26, 2009 - June 3, 2009
Volume XII, Issue 15
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Governor's Plan to Take Local Money Foiled in Court
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Governor's Plan to Take Local Money Foiled in Court
In a spring filled with bad financial news for local governments, an Apr. 30 court decision brought a welcome change of pace. The state superior court sided with redevelopment agencies about Governor Arnold Schwarzenegger's attempt to take or "borrow without a firm repayment date" some $350 million from county and city redevelopment funds to help with the current year's budget deficit.

The court agreed with the agencies that challenged the effort, saying that money earmarked for redevelopment cannot be taken for other uses.

For the moment, that means local governments get to keep their funds. This money ranges from about $2.2 million for the county redevelopment agency to $144,600 in Capitola.

"We're not a rich redevelopment agency. … It's an important little pot of money for the city of Capitola," said community development director Jamie Goldstein, who said there is a backlog of projects along the 41st Avenue corridor.
If accepted by developer Barry Swenson, the majority of the RDA's funds – some $3 million – will be given to Swenson to build a boutique hotel on Wharf Road.

While county redevelopment director Betsy Lindberg is encouraged that the governor's latest budget figures don't include the $350 million into the state's budget, she has not put the $2.2 million back into Santa Cruz County's budget. There could be an appeal. But, at the same time, she hopes the funds stay local.

"It's equivalent to the design and construction for a road improvement project or for a neighborhood park," she said.

Scotts Valley should retain $305,510. That money had been part of its reserves. The governor had earmarked money not already dedicated to a project.


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