Oakdale city officials are scrambling to action after the California Supreme Court upheld the state’s right to dismantle redevelopment agencies across the state in a Dec. 29 decision. The Supreme Court also ruled that an alternate strategy, which some were calling “ransom payments,” was unconstitutional. This decision leaves the City of Oakdale scrambling to meet a four-month deadline to ensure repayment of around $1.5 million owed by the RDA to city held funds.
“Our position, at this time, is that we will be able to repay those debts,” said Interim City Manager Gregory Wellman.
The California Supreme Court decision was an end to a legal struggle that started in June, when the State Legislature sought to close a $1.7 billion budget shortfall. Their solution: forcing redevelopment agencies statewide to either close – redirecting their funding to the state’s general fund – or requiring those agencies to make “voluntary” payments to remain open – which would be diverted in lieu of the state’s obligation to K-12 education.
Oakdale City Council begrudgingly chose to take the “voluntary” payments option. Under that plan, Oakdale would have kept a functioning Redevelopment Agency by paying $829,162 this year and $196,000 every year after. Wellman and several Oakdale City Council members have referred to the payments as “ransom money.” Oakdale Mayor Pat Paul said after voting for the payment plan that it was the only option for keeping an RDA, but that the decision was not really voluntary.
“We felt like we were being held hostage,” Paul said.
The California Supreme Court ruled that the State of California has a right to dissolve redevelopment agencies, and that asking agencies to pay a fee to remain open is unconstitutional. Under this decision, all redevelopment agencies in California will be dissolved.
Oakdale RDA resources have been used to build the Oakdale Gene Bianchi Community Center and Public Plaza, Gladys Lemmons Senior Community Center, and a number of improvements to facades, buildings, parking areas and numerous other projects. In addition, the Redevelopment Agency currently owes $106,739 to the city, and an additional $1,497,089 to the Capital Facilities Funds, which Oakdale Finance Director Albert Avila said is a city account.
The city previously completed an enforceable obligations payment schedule, as required by the state. A committee will be established to oversee the repayment of enforceable obligations. Wellman said that the time frame for that repayment is unclear at this time. Following the Supreme Court’s action, all required deadlines for RDA dissolution have been extended four months. Oakdale city staff will use that time to work through the many questions surrounding the dissolution of redevelopment agencies.
“There should be a sufficient amount of revenue coming in to make those repayments,” Wellman said.
Wellman planned to update council members on the current status of the Redevelopment Agency at the Tuesday, Jan. 3 meeting, which occurred past press time for The Leader.