(18)AR 050509 RDA Budget - Laserfiche WebLink

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ITEM #19 CITY OF COLTON For the Redevelopment Agency Meeting of May 5, 2009 TO: Honorable Chairperson and Boardmembers FROM: Candace E. Cassel, Economic Development Director SUBJECT: Consideration and Approval of Agency Resolution No. 9 Amending the 2008/09 Agency Budget to Allow ERAF Payment of $783,215. DATE: April 13, 2009 BACKGROUND The Redevelopment Agency operates under an annual budget cycle with the current budget having been approved by the City Council on June 17, 2008. While the budget is both an authoritative document and an effective planning tool, it is subject to variations in actual fiscal results depending upon the changes in the economic climate which impacts the Agency's revenue and mandates issues by the State which impacts the Agency's expenditures, among other things. The Agency's projected revenues are on target as are its expenditures with its adopted budgeted. DISCUSSION / ANALYSIS On November 12, 2008, the State Department of Finance notified the Agency that pursuant to Health and Safety Code 33685, (AB1389) it is obligated to make an ERAF (Educational Revenue Augmentation Fund) payment of $783,215 by May 10, 2009. On December 4, 2008, CRA (California Redevelopment Association), along with the City of Moreno Valley filed a lawsuit in Superior Court against the State of California to block sections of AB 1389, which was approved as part of the FY 2008-09 State budget. The lawsuit seeks both to invalidate sections of AB 1389 and prohibit the State from forcing county auditors to divert redevelopment funds to the Educational Revenue Augmentation Funds (ERAF). The lawsuit contends that State takes of redevelopment funds to balance the. State's budget violate Article XVI, Section 16 of the Constitution on multiple counts. For one, the Constitution requires that redevelopment funds only be used to finance specified redevelopment activities. Second, taking redevelopment funds could also unconstitutionally impair contracts, particularly covenants pledging future tax revenues to repay bonds. On March 13, 2009, the Superior Court heard CRA's case and although no decision was rendered, it is anticipated the Court will rule sometime in April. Regardless of which side prevails, it is expected the decision will be appealed. In the event the ruling is not issued, the Judge agreed to hear a motion to stay such payments from being made on April 30, if necessary. In the RDA/Admin/Meetings/2008/May 5/Mid Year Budget ERAF 050509