Culver City Joins 10 Other Cities in Filing Lawsuit Against the State

The City of Culver City had joined forces with 10 other cities in Los Angeles, Orange, Alameda and San Diego counties in filing a lawsuit, “to ensure local property tax funds are disbursed to fund local obligations rather than to the State and other taxing entities.”

The case, City of Palmdale, et al vs. Ana Matosantos, et al, was filed on Tues. May 22 in Sacramento County Superior Court.

Along with Culver City and Palmdale, the other cities that have joined the suit are Pasadena, Glendale, Huntington Beach, National City, Imperial Beach, Inglewood, Hayward, Carlsbad and Stanton.

The move comes following the State’s decision to dissolve over 400 redevelopment agencies in 2011. That bill – AB26 – signed by Governor Jerry Brown, went into effect on Feb. 1, 2012.

According to a release issued by Culver City City Manager John Nachbar:

AB 26 provides specifically that “enforceable obligations” of the former redevelopment agencies (such things as bond payments and contracts) would be paid by the successor agencies using funds from the newly established “Redevelopment Property Tax Trust Fund” held by the various County Auditor-Controllers’ offices in the state’s 58 counties. AB 26 provides for the first major payment to be released to the successor agencies and other taxing entities by the Auditor-Controllers on June 1, 2012.

The State Department of Finance has issued conflicting guidance over the past several days, which significantly increases the uncertainty as to whether the successor agencies will receive sufficient funds necessary to pay the “enforceable obligations” as required under AB 26. For Culver City’s Successor Agency, the amount of funds expected is estimated to be $14.46 million.

The lawsuit is calling on a judge to 1) require the Los Angeles County Auditor-Controller to issue the June 1st payment of the property taxes allocated for the successor agencies to pay their enforceable obligations for the 2012 calendar year; 2) issue a restraining order to prohibit the County from distributing these property taxes to the taxing entities (i.e. the County) while the amount of the June 1st payment to the successor agencies is in dispute; and 3) declare the successor agencies’ rights to receive the June 1st payment.

“We’re concerned that the State Department of Finance is not correctly advising County Auditor Controllers with regard to the distribution of funds, and that monies due the Successor Agency could improperly be distributed to other taxing entities,” Culver City City Manager John Nachbar told Patch.

“The City and the Successor Agency understand and want to fully comply with the obligations of the Successor Agency under the law,” Mayor Andy Weissman said in a written statement. “Based upon the continued uncertainty caused by the State Department of Finance’s lack of clear guidance, the looming June 1, 2012 payment date and the critical importance of this issue, we felt we had no choice but to join the other similarly situated cities in taking this action. We are confident, upon review of the facts, the judge will grant our request for a restraining order.”

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