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County Supervisors Respond to Cities’ RDA Shutdown Complaints: Tough Luck

About a month ago, Santa Clara County cities registered their dissatisfaction with the county’s conduct on RDA oversight boards in a detailed five-page letter to the County Board of Supervisors – who have so far avoided publicly acknowledging the controversy.

The Supervisors’ response to cities’ plea for support and fairness was three paragraphs that could be summed up in two words: Tough luck.

“We understand that the dissolution of redevelopment is a loss for cities that relied upon RDAs to fund economic development, pay for public infrastructure, and dedicate resources for affordable housing,” wrote Board of Supervisors President Ken Yeager in response to the cities’ complaints that the county was maximizing its revenue at their expense.

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“Because RDAs were funded directly from property taxes that otherwise would go to local governments (primarily schools), RDAs did not represent a fiscally sound and sustainable way to support these important needs.”

Yeager was also dismissive of the Cities’ Association criticism about the appointments to the RDA shutdown oversight board, dilatory reports from the county, and unprofessional behavior.

“You can rest assured that the County and its Officers have been and remain committed to the faithful implementation of the Legislature’s mandate to expeditiously wind-down RDAs…Our expectation is that County Officers, staff, and appointees will diligently carry out their fiduciary duties in accordance with the law, and in a manner that is professional and courteous.”

Santa Clara Mayor Jamie Matthews characterized the Supervisors’ response as “unfortunate.” Meanwhile it becomes more and more likely that these conflicts will only be resolved in court. In the meantime, any questions, says Yeager, should go to Deputy County Executive James R. Williams at (408) 299-5128.

County’s Actions Aggressive, Partisan and Costly Says Cities Association

“We are not getting the support needed at home by County representatives to our various Oversight Boards at a critical time,” Cities Association president Margaret Abe-Koga wrote the Supervisors in a January 28 letter concerning the RDA shutdown that’s been underway for over a year.

“In fact, the county’s participation has too often undermined the reasonable, lawful, and long-accepted positions that our cities have taken to minimize disruption…on our communities and the economy. The County’s aggressive posture has put at-risk jobs associated with hundreds of millions of dollars of investment for preapproved public works, housing, and other projects.”

County appointments to RDA successor agency oversight boards also came in for sharp criticism. None of the county appointments are elected officials, and senior officials are frequently passing the job off to staff as career-enhancement opportunities.

“Some of our cities initially urged the Board of Supervisors to appoint elected Supervisors to the Oversight Boards because we recognized that these critical decisions should be made by elected representatives accountable to our communities,” the letter continued. “Instead, the Board of Supervisors chose to appoint staff members, in part, we were told, to provide ‘professional development’ opportunities for county management.”

As a result “the serious business of meeting the dual fiduciary responsibilities (to underlying taxing agencies and to holders of enforceable obligations) is being undertaken by less experienced staff…unfamiliar with redevelopment, land development finance, and/or broad public policy.”

Although these boards are supposed to balance interests of all stakeholders, they are, in practice, says the Cities Association maximizing county revenue at cities’ expense.

“County staff pursues choices that maximize revenue to the County, without consideration of the impact on local communities or our region‘s overall economic and fiscal goals.” The letter says, “The county has adopted an aggressive advocacy approach rather than a neutral independent review” tasking board members “with generating as much income for Santa Clara County, notwithstanding the Oversight Board‘s statutory duty. The result is sometimes an unnecessary and unproductive contentious approach to every decision.”

The letter also highlights some of the costs so far.

In Milpitas, money for a school, public park and low income senior housing project near the new BART station was “compromised due to the aggressive actions of County staff appointed to the oversight board. Audit documents and reports received from County staff are inaccurate, misleading, accusatory and insulting.”

Over $300,000 of Morgan Hill’s RDA revenue has been spent in six months on a county audit that was “unprofessional, inaccurate, and inconsistent with state laws regarding governmental audits…it could not be relied on by anyone for any purpose.”

And in Santa Clara the county is demanding over $300 million in RDA assets – twice the city’s annual general fund budget. “The City firmly believes these assets were transferred from the RDA legally and that they rightfully belong to the City of Santa Clara taxpayers, who funded the obligations to provide these assets.”

The Cities Association had three recommendations for the County.

First, that appointees be current or former policy makers with “appropriate knowledge and experience on property, land development and policy matters to properly discharge the responsibilities of the Oversight Board.”

Second, that the county release documentation about its charges to former RDAs’ revenues in a timely way.

And third, that the board of Supervisors “become more involved and aware” of county staff’s actions, directly appoint oversight board members, and provide specific policy direction.

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The Mlnarik Law Group, Inc.

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