Most of the 25 disbanded redevelopment agencies in Alameda and Contra Costa counties got a hefty bill from the state this week -- with two days to pay it -- and they are hopping mad.
"The $2.4 million payment due in two days and demanded by state Department of Finance was totally unexpected with no advance warning provided to local agencies," said San Pablo City Manager Matt Rodriguez, adding that his city is looking at its legal options.
Pinole is already broke, and now it must borrow $1 million and repay the loan with general fund money, said an infuriated City Manager Belinda Espinosa.
"We have $23 in our cash reserve account," said Espinosa, who has laid off a third of the city's staff. "How much more can the state take from us?"
Redevelopment experts predicted a rough ride when the state started dismantling the $5 billion, 50-year-old California institution, and this week's angst bears that out.
Fremont, San Pablo, Pinole, Danville, Pittsburg and Contra Costa County are among cities and counties across the state challenging California's demand for repayment of what the state considers excess property tax receipts received by former redevelopment agencies in December 2011.
Combined, the 25 former agencies in Contra Costa and Alameda counties owe $62 million.
They will pay, but some will do so under protest. Many were still negotiating the final amounts late Wednesday. Others say they are considering litigation, although it is still mostly talk.
Fremont sent with its $4.4 million payment a strong written protest outlining four legal points ranging from assertions of violations of the state constitution to accusations of a flawed and inconsistent payment methodology.
Meanwhile, the League of California Cities and the California State Association of Counties conferred with the Department of Finance on behalf of their members.
"There (is) a lot of concern out there," said Jean Hurst, a legislative representative with the state counties' organization. "We know the state is relying on the funds, but at the same time, we are trying to get it right."
League Executive Director Chris McKenzie characterized the agencies' shock as reasonable given the insertion of the bill's more severe provisions within hours of its passage. In particular, he cites the threat of a state deduction of a city or county's sales tax receipts and steep interest penalties if it fails to pay.
The Legislature dissolved the state's 400 redevelopment agencies in 2011 as a means to help close the state budget gap, a move the California Supreme Court upheld last December. This week's payment is one of several specified in a budget trailer bill approved by state lawmakers in late June, but the agencies did not learn how much they would have to pay until Monday night.
The state estimates it will collect $3 billion statewide from former redevelopment agencies this fiscal year, which will offset its general fund payments to schools and community colleges. And this isn't the end. The state will return to the agencies several more times to settle and collect on their assets.
The disputes with the cities and counties involve both specific discrepancies and broader objections. For example, Pittsburg challenged its bill based on items it says were missing from its calculation sheet and has significantly reduced the total, said City Manager Joe Sbranti.
"We started with $7.3 million, but it was reduced to $3.3 million on Tuesday," Sbranti said. "We think it will drop even further before we're done."
Most of the anxiety, though, is about the state's methodology behind the first payment, which requires the return of uncommitted property tax receipts the individual agencies banked in the weeks before the court's decision. The cities and the counties say they used that money to pay their bills.
Staff writers Eve Mitchell, Rowena Coetsee, Jason Sweeney, Paula King, Tom Lochner, Paul Burgarino, Angela Woodall and Elisabeth Nardi contributed to this story. Contact Lisa Vorderbrueggen at 925-945-4773, firstname.lastname@example.org, www.ibabuzz.com/politics or Twitter.com/lvorderbrueggen.
California has billed former redevelopment agencies for property tax receipts it says were overpaid in December 2011. Here's what East Bay agencies must pay by Thursday:
CONTRA COSTA COUNTY
Antioch $2.4 million
Brentwood $2 million
Clayton $1.5 million
Contra Costa County $2.2 million
Danville $1 million
El Cerrito $1.7 million
Pinole $1.1 million
Pittsburg $7.3 million*
Pleasant Hill $213,028 million
Richmond $1.73 million
San Pablo $2.4 million
San Ramon $464,331
Walnut Creek $285,809
TOTAL: $24 million
* Pittsburg has reduced its bill to $3.3 million and it may drop further, according to City Manager Joe Sbranti.
Alameda County $5.2 million
Fremont $4.4 million
Livermore $1.3 million
Oakland $21.5 million
San Leandro $4.8 million
Union City $828,964
TOTAL: $38 million
Source: Auditor-controller offices of Alameda and Contra Costa counties