California redevelopment agencies allegedly misused state funds & shortchanged local schools

A report released by California State Controller John Chiang revealed how local redevelopment agencies have misused millions of dollars in state redevelopment funding and shortchanged local school districts by $33.6 million last year.

Click on the image to download the State Controller's redevelopment agency review.

The analysis was based on data collected from 18 redevelopment agencies that comprise 16% of the redevelopment funds spent during 2009 – 2010 fiscal year.

Below are some of the key findings:

Palm Desert's RDA has allocated $16.7 million to address "blight" at the Desert Willow Golf Resort. PHOTO SOURCE:

  • Palm Desert’s redevelopment agency has allocated $16.7 million to renovate the Desert Willow Golf Resort, which was voted 4.5 stars and rated “Best Places to Play” by Golf Digest Magazine. Over $900,000 has been assigned to pay for the “renovation of all 18 greens, reshape greenside bunkers and fairway bunkers, install new bunker drainage improvements, bunker liners, new sand, and restoration of all lake edges,” according to Chiang’s report.
  • Five cities – Los Angeles, Parlier, Hercules, Calexico, and Desert Hot Springs – collectively charged more than $1 million to the state’s Low and Moderate Income Housing funds to cover costs that were not directly related to providing low or moderate income housings.
  • The City of Hercules inappropriately charged $9,600 of its lobbyist’s expenses to the LMIH Fund.
  • The City of Desert Hot Springs charged $162,000 for “code enforcement” services that were not related to low or moderate income housing.
  • The City of Los Angeles charged 20% of its general redevelopment administration costs to the LMIH fund.
  • The City of Parlier improperly charged the LMIH to cover the cost of purchasing a daycare center.
  • The Pittsburg’s redevelopment agency made $16.6 in undocumented interest-free loans to the City of Pittsburg’s General Funds in FY 2009 – 2010. More than $15.4 million of the “loan” remain unspent at the end of the fiscal year.
  • Five out of the 18 redevelopment agencies failed to pay mandatory deposits to the  Supplemental Educational Revenue Augmentation Fund (SERAF). The SERAF funds are distributed to the local school districts serving the redevelopment project areas. The state was forced to cover the $33.6 million shortfall to meet the minimum school funding levels for FY 2009 – 2010.

“For a government activity which consumes more than $5.5 billion of public resources annually, we should be troubled that there are no objective performance measures demonstrating that taxpayers are receiving optimal return for each invested dollar,” said State Controller John Chiang in a statement. “The lack of accountability and transparency is a breeding ground for waste, abuse, and impropriety. In whatever form local redevelopment takes in the future, the level of oversight and openness must be consistent with the amount of public dollars entrusted to their care.”


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