Local News

Friday, Feb 15 2013 10:00 PM

City suing over redevelopment debt

By THE BAKERSFIELD CALIFORNIAN

The city of Bakersfield is suing to compel the state to stop blocking collection of certain property tax money to pay off redevelopment debt.

Bakersfield staff filed the lawsuit on Wednesday in Sacramento Superior Court, according to a memo from City Manager Alan Tandy Friday.

Bakersfield is the successor to the city's now-dissolved redevelopment agency and is responsible for funneling property tax money to pay off remaining redevelopment debts. The state Department of Finance has to approve each debt for the city to keep getting part of property tax money to pay off those debts.

At a high point last year, the Department of Finance challenged some $28 million in Bakersfield redevelopment debt and other redevelopment funding coming to the city. City administrators pushed back, and that figure eventually was cut to $13 million in December.

Of major concern to the city was $17 million in debt related to the Rabobank Arena, which would have come directly from the city's general fund. The city issued bonds for the arena's construction and the redevelopment agency, then a separate entity from the city, was repaying the city for that money, using property tax proceeds it received. When the agency was dissolved, Bakersfield took on that debt.

The state approved repayment, through property tax proceeds, for $12 million of the $17 million, leaving the city on the hook for $5 million. That's one issue the city now is suing over.

The other is $4.2 million in property tax money the city would keep getting if the state wasn't blocking it. That money is marked for two housing projects: low-income housing on 20th Street and low-income housing in the Mill Creek development on S Street. Bakersfield administrators have argued that the city is required to finish those projects.

"It's the wrongful denial of legitimate obligations," Tandy said Friday evening. The lawsuit seeks "to make them comply with what we believe the law says they should've done in the first place."

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