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Redevelopment money fight heats up as state controller announces it will audit 18 agencies

January 24, 2011 |  1:56 pm

Turning up the heat on cities and counties in California, state Controller John Chiang announced Monday that his office will scour the books of 18 redevelopment agencies across the state to make sure dollars are being spent as the law intends.

Chiang will deploy staff to the selected agencies over the next few weeks, spokesman Garin Casaleggio said, with a goal of having a report in hand by early March. "It will be swift,'' he said.

The agencies to be reviewed include those in Los Angeles, Fresno, San Jose and the counties of Sacramento and Riverside. They also include smaller cities such as Placentia in Orange County and the border city of Calexico.

Chiang's move comes as municipal governments are pushing back against Gov. Jerry Brown's proposal to do away with redevelopment agencies, a move he said will save the state as much as $1.7 billion. In the weeks since the governor made his pitch, cities have hastily earmarked redevelopment funds for future projects, seemingly putting the dollars out of the governor's reach.

Redevelopment agencies take property tax dollars that normally would fund schools and other programs to pay for development projects in blighted areas. Cities say they are critical to breathing new life into aging business centers. Critics, though, see the funds as a giveway to developers.

Controller's office spokesman Casaleggio said the reviews are not a veiled threat for cities and counties to back off, but rather a way for the state to gain "empirical evidence" on whether redevelopment agencies are operating in a legal manner.

Chiang also pressed that view in a statement:

“The heated debate over whether RDAs are the engines of local economic and job growth or are simply scams providing windfalls to political cronies at the expense of public services has largely been based on anecdotal evidence,” Chiang said. “As lawmakers deliberate the Governor’s proposal to close RDAs and divert those funds to local schools and public safety agencies, I believe it is important to provide factual, empirical information about how these agencies perform and what they bring to the communities they serve.”

The agencies to undergo review were chosen to create a mix of large and small entities, as well as rural and urban, Casaleggio said. Redevelopment agencies have been audited in the past by the controller's office, usually to make sure that they are "passing through" tax dollars to school districts as state law mandates, he said.

This review will go further, looking not for accounting flaws but whether funds are being spent in a legal manner.

The controller will also ask for information on salaries and benefits paid to staff members and elected officials governing the agencies, something it has never before requested, Casaleggio said.

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-- Catherine Saillant

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