San Leandro Sues State Over Redevelopment Funds

The City of San Leandro is suing state financial agencies in an effort to prevent the state from taking millions of dollars in disputed redevelopment funds, according to media reports.

Nearly 400 redevelopment agencies across the state were dissolved by Gov. Jerry Brown last February with the agencies’ collective $1.7 billion used to help close California’s budget gap.

The move has drawn critical financial concerns for cities throughout the state, with many establishing successor agencies to complete redevelopment agency functions and pay off debts.

In question for San Leandro is $6.59 million in leftover redevelopment funds. However, city staff say they owe only $521,000, according to a Bay Area News Group report.

The City of San Leandro filed a lawsuit on Jan. 17 against the Department of Finance, the Alameda Audit Controller and other agencies to dispute the confiscation of the funds.

The city claims that it was wrongly charged for an area covered by both the city and the county’s redevelopment, and that it needs the disputed funds to pay off the redevelopment agency’s debts.

The lawsuit could be resolved next month, city attorneys told BANG.

If the court rules in San Leandro’s favor, it could free up millions of in tax revenue dollars that the county has been withholding from the city.

"The whole post-redevelopment process has been much more complex and convoluted than anyone ever imagined," an attorney told BANG.

San Leandro isn’t the only one suing the state.

El Cerrito filed a lawsuit in December and was able to reach a settlement that allowed El Cerrito to keep $1.76 million, according to BANG.

Union City filed a lawsuit on Jan. 29 over a disputed $54 million in redevelopment funds to demand that the city be allowed to use funds for social service programs and development projects that were initiated and helmed by the former redevelopment agency.

Read the full BANG report here.