Grass Valley pays ‘ransom’ to keep redevelopment agency intact | SierraSun.com

Grass Valley pays ‘ransom’ to keep redevelopment agency intact

Trina Kleist
Sun News Service

GRASS VALLEY, Calif. – Calling one element of California Gov. Jerry Brown’s budget “extortion,” Grass Valley city leaders reluctantly agreed late Tuesday to pay $706,000 to keep their redevelopment agency.

“This is a very painful item,” city Community Development Director Joe Heckel said during Tuesday’s City Council meeting. “Some are calling it ransom. … Basically, we’re paying to play.”

City Councilman Dan Miller called it “extortion money,” but he and other members voted 5-0, under protest, to approve the payment.

The city also must pay $116,000 annually in future years to keep the agency that will fund a major chunk of the costs for the long-awaited interchange at Dorsey Drive and Highway 20/49.

Construction on that project is expected to start next year, and the $5 million set aside to help fund it is “safe,” Heckel said.

Meanwhile, the city is exploring avenues for appealing the amount to be paid, and also is supporting legal action against the state being brought by two associations.

Grass Valley’s bill was assessed by the state Controller based on the city’s finances during fiscal year 2008-09, City Administrator Dan Holler said.

Since then, the city has taken on debt – $5 million in bonds issued through the city RDA for the Dorsey Drive interchange.

The state “can’t impair the repayment of those bonds,” giving the city grounds for appeal, Holler said.

He estimated the city should be able to cut its share by about $100,000, he added.

Cities are being allowed to keep their agencies, but only if they pay a fee to the state.

The California Redevelopment Association and League of Cities have filed a lawsuit to block the state plan and have asked for a stay on the payments; the first payment is due in January, said City Attorney Ruthann Ziegler.

In Grass Valley, millions of agency dollars have been used to improve neighborhoods, upgrade low-income housing and create public art; but agencies elsewhere have come under fire for illegal practices.

All of them use a portion of property tax payments to fund their projects; $1.7 billion that formerly funded RDAs now will help solve the state’s budget shortfall.