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County Makes First Distribution of $13.2 Million after State’s Dissolution of Redevelopment Agencies

SANTA CLARA COUNTY, CALIF.—Today, in accordance with the state’s redevelopment agency dissolution law known as ABX1 26, the County of Santa Clara Auditor-Controller made the first distribution of funds to schools, cities, special districts, and the County from the Redevelopment Property Tax Trust Funds for the former redevelopment agencies in the County.

Today marks the first distribution of funds to local agencies that were adversely affected by diversions of property tax revenues to Redevelopment Agencies (RDAs).  While, as expected, initially much of the Trust Fund money will be used to pay off existing RDA debts, the County Auditor-Controller is distributing about $13.2 million in funds to local governments.  Most of the money will go to schools.  For example, Milpitas Unified School District is expected to receive over $3 million and San Jose-Evergreen Community College over $500,000. 
In Santa Clara County, there are nine former RDAs, established by the Cities of Campbell, Cupertino, Milpitas, Morgan Hill, Mountain View, San José, Santa Clara, and Sunnyvale, and the Town of Los Gatos.  Each jurisdiction became the “successor agency” responsible under the law for directly winding-down each former RDA.  One of the successor agencies, Cupertino, has already taken steps to rapidly wind-down its affairs, saving the other local governments significant administrative costs.
Under the law, the County Auditor-Controller has a duty to distribute the Trust Fund monies in a set priority order: first, for pass-through payments to local governments pursuant to the old RDA law; second, for payment of the RDA’s debts; third, for the successor agency’s administrative costs; and, fourth, all remaining monies are distributed to affected local governments like normal property tax.
“To get to this point, County staff and staff from each of the successor agencies have worked diligently to create, audit, and certify the schedules of enforceable obligations of each former RDA,” said Vinod K. Sharma, County Director of Finance.  “Only through the tireless effort of all parties have we been able to timely implement the law.”
For the largest former redevelopment agency, San José, the picture is somewhat clouded.  On May 1st, San José informed the County Auditor-Controller that San José has insufficient funds to pay all of its debts.  Under the new law, this situation triggers a different procedure for distributions from the Trust Fund and requires the State Controller’s concurrence.  Consequently, distributions from the San José Trust Fund are on hold.  The County Auditor-Controller is proactively seeking the State Controller’s concurrence and will distribute the funds as soon as legally possible.
To assist San José while it tries to determine how to move forward, the County on its own initiative is creating a $10 million reserve and continuing conversations with the City over how the County might be able to provide assistance to the City in meeting the former RDA’s substantial debts, including millions owed to the County.
“While the County has faced enormous and painful budget cuts, we are also committed to working with San José on legally-permissible solutions that can help the City deal with the former RDA’s crushing debt burden,” said County Executive Jeffrey V. Smith.

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Media Contact: Gwendolyn Mitchell/Laurel Anderson, Office of Public Affairs, (408) 299-5119
Posted: June 1, 2012