Dear Santa Clara Community,
We are writing to inform you of a critical issue that could have devastating, long-term impacts on our City’s budget and the vital services we provide our local residents and businesses. Very soon, the State of California will likely issue a report demanding that our City transfer more than $300 million – two times our General Fund budget – in assets that belong to the City of Santa Clara and our taxpayers to fund other obligations required by the State.
We believe this action by the State is both unfounded and improper, and your City Council and staff are doing everything in our power to protect these local city taxpayer assets from State raids. The stakes for our community couldn’t be higher. If the State is successful, this raid of Santa Clara City funds would also reduce our City budget by as much as $13 million annually.
While we cannot say for certain the steps we’d have to take in the wake of such a massive diversion of our City funds, to put it in perspective, the revenues in question are roughly the equivalent of either:
- Most of the Parks & Recreation Department, including the Senior, Youth and Teen Centers ($14 million)
- Operation of the City’s Libraries and most of our annual street & road repair budget combined ($15 million)
- Roughly half of our total Police Patrol and Investigators ($13 million); and
- Half of our City’s Firefighters ($15 million).
The money in question has to do with the State Legislature and Governor’s action to abolish local community redevelopment agencies in June of 2011. As part of that State law, hundreds of redevelopment agencies throughout the State – including the City of Santa Clara – were required to shut down and liquidate their assets to fund State obligations or go to other government entities.
Despite our strong objection to the elimination of redevelopment, the City of Santa Clara has worked diligently to meet all of our requirements under this State law. In fact, because of the new law, it is anticipated that our City and former redevelopment agency will be forced to transfer tens of millions of dollars out of our City to meet the State’s requirements. These are funds that otherwise would have benefited local affordable housing projects, community economic development and job creation, and other projects to revitalize our community.
But the City is doing the right thing by following the law.
However, we believe the $300 million that the State Controller may soon demand our City liquidate and transfer are rightfully City assets and property, and we are fighting the State’s efforts to divert these funds. As part of the City’s redevelopment strategy, over the past decades we acquired a number of buildings, real estate and other property. The City has received tens of millions of dollars in rent and lease payments from these assets every year – revenues that have always gone to supplement our City’s General Fund. Again, these properties bring in about $13 million per year.
Months prior to the passage of the State law to abolish redevelopment, these properties and assets were legally transferred to the City. The State is now trying to retroactively claim property and assets that were transferred to the City months before the State law was even passed. We believe the State has no rightful claim to force us to give up City assets.
The State of California has been very aggressive in its attempt to force cities throughout the State to redirect local funds. We anticipate that very soon the State Controller will be issuing a critical report, in an attempt to divert our City assets.
Please know, we will do everything we can to prevent further State transfers of our City assets. We have an obligation to our residents and taxpayers to protect your local tax dollars and your local services.
We promise to keep you informed as the situation unfolds.
Mayor and City Council