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For Immediate Release
Wednesday, April 2, 2014

Media Contact
Sheri Costa-Batis
Public Communication and Engagement Manager

Redwood City to Appeal Trial Court Ruling that Affordable Housing Funds
Should be Paid to Taxing Entities
Legal Aid Society Expected to Join in Appeal

Redwood City, Calif. – The City Council of Redwood City announced it will appeal a trial court decision that $10 million of affordable housing funds, set aside under a 1990 agreement with the Legal Aid Society, should instead be paid to taxing entities.  LAS, which had filed its own lawsuit challenging the same order from the State’s Department of Finance, is expected to join in the appeal, which will be filed with the Third Appellate District  in Sacramento.

The trial court determined that because there were no agreements in place to spend the funds on specific housing projects, they were “uncommitted” and thus available for distribution by the State to the local taxing agencies.  Redwood City believes that an appeal may result in a greater understanding that affordable housing funds are indeed committed funds that must be amassed in greater quantities before being earmarked for specific projects.

“What we feel the court did not fully understand is that affordable housing funds cannot be spent in increments,” said Mayor Jeffrey Gee.  “A city must amass a large amount of dollars in order to effect change and earmark funds for specific projects. If this decision stands, it will have a ripple effect on any city that was in the process of raising enough affordable housing funds to be able to build specific projects that would allow people of all incomes to live together in the same community.”

“It’s also important to note that over the years, Redwood City’s redevelopment agency spent millions of dollars on affordable housing,” said Mayor Gee.  “With the elimination of redevelopment agencies, an important funding source for affordable housing has been lost.  We also want to live up to our agreement with Legal Aid Society to spend the money we said we would spend on affordable housing.”

This lawsuit is a result of the Legislature’s 2011 elimination of California’s nearly 400 redevelopment agencies, local entities that received a share of property taxes and used them to renovate blighted urban areas and develop affordable housing.  Redevelopment agencies were replaced on February 1, 2012 by successor agencies, which, in most cases, were their host cities or counties.  Each successor agency was required to have an independent auditor determine what funds it could retain from the former redevelopment agency to pay for existing contractual obligations and what funds were available for distribution to taxing entities.  While Redwood City’s auditor and the successor agency’s oversight board determined the $10 million was contractually obligated to be spent on affordable housing, the state Department of Finance overturned that decision.  Both Redwood City and LAS then filed their lawsuits.

More than 180 lawsuits have been filed regarding the legislation dissolving redevelopment agencies, more than 100 of which are actively being pursued at the trial and appellate court levels.  The vast majority of these suits challenge determinations made by the Department of Finance, including several involving affordable housing projects and agreements. Once the appeal is filed, it could take several months to a year to have a court hearing.

To learn more about affordable housing, please visit the City’s Web site. If a community member agrees that affordable housing is important to Redwood City, they are encouraged to call local State legislators and share their desire to have the State not restrict the ability of local government to fund affordable housing so that people of all income levels are able to live in Redwood City.



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