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June 4, 2013 > City of Milpitas will sue over former Redevelopment Agency assets

City of Milpitas will sue over former Redevelopment Agency assets

Submitted By Susan Barrett

May 28, 2013 - The Milpitas Successor Agency's Board, the City Council of the City of Milpitas and the Board of Directors of the Milpitas Economic Development Corporation have authorized litigation to resolve the disagreement regarding control over the former Redevelopment Agency's cash and non-cash assets.

The State Department of Finance has issued an order to transfer approximately $38 million dollars for distribution to taxing entities. Milpitas disputes the validity of this order. This litigation will be filed against the County of Santa Clara, the California Department of Finance and the California State Controller and will be coordinated with litigation the County already has commenced on the same issues. Milpitas's counsel has been in contact with the County Counsel and with counsel for the State Controller and DOF regarding these matters.

In February of 2011, the Milpitas Economic Development Corporation, a private non-profit public benefit agency was created. In March of 2011, the Redevelopment Agency of the City of Milpitas transferred funds and assets to the Economic Development Corporation in accord with law. Three months later, in June 2011, the California State Legislature dissolved all Redevelopment Agencies. In June of 2012, fifteen months after funds were legally transferred to the Milpitas Economic Development Corporation, the Legislature adopted laws that attempted to invalidate the transfer of those funds, even though those transfers were valid when made.

The State Legislature passed those retroactive provisions in order to seize as much money as possible to cure a budget shortfall created by its own mismanagement. The State has done this before, using local government assets as an emergency reserve fund when it cannot meet its own financial obligations. The State arrogantly assumes its own needs are more important than that of local government, but Milpitas' use of the disputed funds would definitely be for local projects benefiting Milpitas and its citizens, such as for Milpitas parks, schools and affordable housing, whereas in the hands of the State, the funds will likely be scattered to the winds.

These funds were legally distributed for the purpose of benefiting the Milpitas community. The State of California should not be allowed to take them back because it cannot control its own spending.

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