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Ruling Blocks Withholding Goleta Tax Revenues
updated: Dec 14, 2013, 6:11 PM

Source: City of Goleta

A Sacramento Superior Court Judge issued rulings in two lawsuits this week which effectively prevent the State from following through on its threat to withhold up to $18 million in disputed payments from the former Goleta Redevelopment Agency (RDA) to the City of Goleta before the Court has a chance to hear a lawsuit filed by Goleta to validate the payments.

The City has asked the Court to prevent the State from withholding the funds until its lawsuit can be heard. The lawsuit demonstrates that the payments from the City to the RDA were payments pursuant to longstanding contracts, specifically the agreement by the RDA to pay the City to construct the San Jose Creek Flood Control Improvements to remove the dangers of flooding from the Old Town RDA project area. The project is nearing completion.

Judge Michael Kenney issued an Order in the City case on Friday pointing to a separate decision he had made earlier in the week in a lawsuit filed by the League of California Cities against the State. In that case, the Judge ruled the "clawback" provision unconstitutional in the legislation to dissolve redevelopment agencies statewide that allowed the State to unilaterally withhold tax payments to cities and counties when it felt they owed money back to the dissolved redevelopment agency.

"It is unfortunate that the State wasted so much time, effort and money for both the State and the City trying to secure these monies before a Court can decide the issue," said Goleta City Attorney Tim Giles. "The City is confident that the payments were proper and appropriate and, consistent with the legislation, are valid payments by the RDA."

"This decision validates the City position that the Governor's intention in this legislation was purely an improper money grab, attempting to take local tax dollars to solve the State's budget mess," said Goleta Mayor Michael T. Bennett.

Prior to incorporation in 2002, the County had set up the RDA for the primary purpose of fixing the flooding problems in Old Town Goleta. After the City incorporated, it continued to work with the RDA to design and construct the improvements. The City had entered several funding agreements with the RDA as recently as 2009 documenting the RDA commitment to pay the City to fix the flood control channel. In 2011, the RDA issued bonds and used the money to pay the City to enter a construction contract. Later in 2011, the State passed a law to dissolve redevelopment agencies statewide. The law recognized that agencies preexisting contracts were valid, with few exceptions.

 

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