Fee sends redevelopment agencies to court: CRA alone will lose $2 million unless court intervenes.

Fee sends redevelopment agencies to court

CRA alone will lose $2 million unless court intervenes

With millions of dollars in revitalization funds on the line, a legal skirmish over an obscure fee being levied by California's counties has redevelopment agencies across state seeing red -- and red ink.

At issue is the legality of an administrative fee that county governments levy on redevelopment agencies by collecting property taxes from the projects created by the agencies. The fee was approved by the state legislature last year as part of a last-minute effort ot close the budget deficit.

Opponents of the tax say tens of millions in dollars already earmarked for affordable housing programs and debt service are being held hostage, including $2 million for the Los Angeles Community Redevelopment Agency alone.

Municipal redevelopment agencies as close as Los Angeles, Glendale, Culver City and Orange and as far away as San Jose and Santa Clara are plaintiffs in the lawsuit. The counties defending the case are Los Angeles, Orange, Riverside and Santa Clara.

The suit was originally filed in the California Supreme Court last April by the Los Angeles-based law firm of Kane, Ballmer & Berkman, which is representing eight redevelopment agencies. The state's high court transferred the case to the Second Appelate District Court of Appeals in Los Angeles, which set a July 17 date for a hearing on the matter.

While California's constitution bans so-called "add-on fees" arbitrarily levied by counties on the taxes they collect for redevelopment, the new state statute does allow counties to charge local jurisdictions an administrative fee to help offset the costs entailed in the collection of property taxes.

Kane, however, argued that local redevelopment agencies are not "local jurisdictions," and are thus exempt from paying the fee. Kane wants the court to eliminate the charge and demand the distribution of funds, including an

estimated $300,000 for the Culver City redevelopment agency.

"This is a desperate situation born of the fiscal problems at every level of government," Kane said. "But it's been clear that redevelopment agencies are public corporations established by the state, and act as an administrative arm of the state carrying out redevelopment policies. Case after case has shown they are not routinely known as local organizations."

Assistant Los Angeles County Counsel Larry Launer disagreed. He said the law authorizing the fee requires that recipients of taxes collected by county governments -- whether they are school districts, cities or redevelopment agencies -- "must pay a pro rata share."

"It's a matter of legislative intent and that's what we intend to argue in court," Launer added.