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State again rebuffs county on Hwy. 12 funding

For the sixth time, the state has denied letting the county use funds from the former redevelopment agency to finish the Highway 12 project.

Ever since the state dissolved the redevelopment agency back in February following a state Supreme Court decision, the county has been submitting the Highway 12 project as part of its Recognized Obligation Payment Schedule (ROPS).

And every time the county has submitted it, the state has denied it. On three occasions, the state denied the county the use of funds. The county appealed each of the three times and each appeal was turned down.

In October, the Board of Supervisors OK’d a request from the Oversight Board to sue the state, if necessary, for the funds. The Oversight Board was created to finish projects and dispose of property from the redevelopment agency.

The suit has yet to be filed, but on Tuesday, John Haig, the county’s redevelopment manager, told incoming Supervisor Susan Gorin that the county was holding off on the suit to see if the state would approve the project this time.

At the time, Haig said Community Development Commission administrators were awaiting word from the state.

Thursday, Haig said that the county is moving forward with the suit.

“We are on the same track,” he said. “We would have stopped if we reached an agreement (with the state).”

In a letter from the state Department of Finance, dated Tuesday, Steve Szalay, the agency’s local government consultant, said that the department continues to deny $9.5 million in funding for Highway 12.

Again, the Department of finance claimed that the contract is invalid because it is between two government agencies and that contracts between government agencies were ruled invalid as a result of the Supreme Court decision.

Twice, the county has asked for face-to-face meetings and one phone conference with the DOF to plead its case – to no avail.

The state contends that all contracts between two county entities are null-and-void even though the legislation apparently allowed the county Oversight Board the authority to re-enter into contracts. But the DOF is contending that the null-and-void is permanent and that the Oversight Board can’t re-enter into contracts with other county entities.

Had the county been a few months farther along in making the second phase of the sidewalk and lighting project “shovel-ready,” there likely would have been no grounds for the state to deny use of the funds whatsoever. The overall project has been in planning and construction stages for nearly 20 years.

At Tuesday’s meeting, Haig and Kathleen Kane, director of the county’s Community Development Commission, brought Gorin up to date on the Highway 12 project.

Haig told Gorin that the county has $2.2 million in bonds from the $15 million bond issue in 2008, and has another $4.3 million in cash. The Highway 12 project is expected to cost about $6.75 million.

While the state is trying to stake its claim to the cash, Haig said the state has no claim on the bonds.

And while the county is seeking alternate ways to fund the project, Kane said that she wasn’t sure the county could get federal funding to finish the work.

She said while Caltrans is in favor of the project, it won’t go on the record or officially support it.

Kane said the county is receiving some money from the state that formerly went to the redevelopment agency, but it’s not getting much.

“We’re making bond payment of over $1 million a year,” she said. “And that won’t change for the next 18 years.”

She did say that as property values rise, there will be additional money available but it wasn’t going to be a windfall.

Just last week, the Supervisors approved spending $450,000 to make the Highway 12 design plans shovel ready. But even then, it could take until July to have the plans complete.