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For Immediate Release
March 27, 2013

Robert B. Bell
City Manager

Redwood City Files Suit Against State to Retain $10 Million in Affordable Housing Funds

Redwood City, CA - The City of Redwood City has filed a lawsuit against the State of California to retain $10 million in funds earmarked to provide for below-market rate housing in the community, which the State claims must be turned over as part of the State-mandated dissolution of the City's redevelopment agency. The suit was filed on Friday, March 22, 2013.

Prior to the statewide dissolution of all California redevelopment agencies last year, the Redwood City Redevelopment Agency was accumulating funding above and beyond the required 20% affordable housing "set aside," to provide for low and moderate income-level housing in the community (state redevelopment law had required that redevelopment agencies set aside 20% of their tax increment revenue for the provision of affordable housing). Redwood City had $10 million in its housing fund, which was committed through a 1990 agreement with the Legal Aid Society of San Mateo County (LAS), a nonprofit organization focused on housing issues.

Redwood City intended to utilize these funds to develop the former redevelopment sites on Bradford Street and Heller Street, which the City took on as the "housing successor" to the defunct redevelopment agency. Redwood City also intended the funds be used to assist in the development of other affordable housing projects. Instead, when State legislation required the dissolution of redevelopment agencies, Redwood City was notified that those funds committed through the 1990 LAS agreement were required to be turned over to the San Mateo County Auditor-Controller as part of the wind-down of redevelopment agencies, along with the unspent 20% affordable housing set aside funds.

At the direction of the City Council, City staff met with staff for the California Department of Finance in Sacramento, making the argument that it was Redwood City's right to retain those funds for purposes intended under the 1990 LAS agreement. When the State denied that argument and demanded the funds be turned over, the City Council directed the City Attorney to file suit seeking to have the courts order the State Department of Finance to allow the City, as the housing successor, to preserve those funds for affordable housing purposes.

"We believe we have an obligation to the Redwood City community and to the Legal Aid Society to keep these funds so they can be used for their intended purpose - affordable housing," said Redwood City Mayor Alicia Aguirre. "Not only would turning over these funds be a breach of our agreement with the Legal Aid Society, it would cripple what little ability the City has left to directly promote the provision of affordable housing in Redwood City."

It's unclear when the suit will be heard, but it will likely not be until summer, at the earliest.

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