Redevelopment projects throughout Stanislaus County could slow to a crawl after agencies on Monday forwarded more than $13 million — under protest — to Sacramento.
The money will come back to local schools as a replacement for state funding under a financial scheme implemented last year during the state's budget battle. Redevelopment agencies cried foul and sued, but a judge last week upheld the transfers and an appeals court Friday denied a stay.
"It's a big hit," said Kirk Ford, the county's planning director and executive director of its redevelopment agency, which was forced to send $2.8 million.
Losing that money likely will delay plans for new water and sewer lines and storm drains in unincorporated Modesto pockets including the airport neighborhood, Parklawn and South Seventh Street. Future phases of Empire's storm drain project will be put off, as will other reconstruction dreams in Salida, Denair, Grayson, Westley, Hickman, Crows Landing, Valley Home and the Monterey Park Tract.
Modesto gave up about $2 million, jeopardizing plans to bring affordable housing to Tower Park and develop a business park off Kansas Avenue.
Turlock, which boasts the wealthiest redevelopment agency in the county, grudgingly handed over $3.3 million and must search for other funding to build a new public safety center with police and fire offices.
It seems unfair that agencies with the foresight to save are dinged more, said Heidi McNally-Dial, Turlock's redevelopment manager. Payments were calculated on agencies' 2006-07 tax increment, which is based on land values having increased since a given agency was formed.
"Sad to say, the cities that have done the best in terms of priming the pump are taking the biggest hit," she said. "It really is frustrating."
Tim Ogden, Riverbank's economic development director, said: "Based on the impacts from the depressed economy and the state's take, I don't see any major projects in the next few years. Should stolen goods be returned, or the economy picks up, things could change."
The money grab will have a "chilling effect" on Oakdale's plans for a small-business incubator as well as a financing plan for East F Street redevelopment, City Manager Steve Hallam said.
"It seems ludicrous that the state would raid funds (meant) to stimulate jobs and economic growth," Hallam said.
About 400 redevelopment agencies throughout California on Monday sent $1.7 billion and are expected to pay an extra $350 million next year. They remain hopeful for a favorable appeals court ruling and are trying to qualify a November initiative preventing the state from taking local revenue.
The state's budget gap is about $18.6 billion.
Bee staff writer Kevin Valine contributed to this report.
Bee staff writer Garth Stapley can be reached at firstname.lastname@example.org or 578-2390.