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May 15, 2012 > Editorial: Pitching pennies

Editorial: Pitching pennies

You may remember a gambling game of pitching pennies against a wall. The player who tossed the coin closest to the wall won the game and collected winnings from others who had tried their luck. While pennies were worth more years ago, players still had to gather many of them to amass a meaningful amount. Skill, luck and some gambler tricks were essential to success. Loss of a penny was considered a reasonable bet and many thought nothing of the amount invested. For the serious gambler however, this was serious business and represented significantly more than a single penny.

Although the value of the small denomination and composition of coins have been radically altered, the sentiment remains the same. What may have been considered easy and small choices in the past, combined with other fiscal decisions, can add up to major impacts. In the case of government, the definition of "small" and "insignificant" is in the eye of the beholder. Lessons of what is considered relevant and material is now in the forefront of negotiations between "Successor Agencies" and oversight boards including the State Treasurer.

Most cities opted to create a Successor Agency to their Redevelopment Agency when the Supreme Court of California didn't see things their way and abolished the redevelopment golden goose of cash. In response to dissolution, a list of agency "obligations" was required to be reviewed and approved by others. The result of this audit of redevelopment spending patterns is now under close scrutiny and not all debts will be swept under the successor agency rug. Cities may find themselves in an uncomfortable position. Debts and payment arrangements easily consolidated under redevelopment's with little control or public mandate, ostensibly to eliminate blight, are finding a bit more resistance from other agencies.

What may have been considered acceptable and even a minimal (pennies!) cost of doing business under the umbrella of tax increment spending is now open to debate and possible revision... a city liability? Obligations that redevelopment agencies assumed as future debts may grow in present and immediate significance if denied by county and state oversight.

Many cities engaged in land swaps and trades when faced with the demise of Redevelopment Agencies and are now faced with substantiating those actions. Reports to city councils are beginning to sound ominous - the validity of these tactical maneuvers is being called into question. Not all of these dollars spent will withstand close inspection. But someone will have to pay the bill.

Listen carefully to the reports of Oversight Committee representatives and ask if the message is wholesale acceptance of what has been listed as Successor Agency obligations. Discussions and negotiations are underway and the pennies spent are growing quickly to become dollars. Who will pay the cost? Just like the time-honored game of pitching pennies, the game is not over until the last coin is tossed!

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