Fountain Valley joins suit to save redevelopment funds

Fountain Valley’s redevelopment agency has joined another city and the California Redevelopment Assn. in a lawsuit that aims to stop the state from diverting cities’ redevelopment funds toward education.

The Fountain Valley Agency for Community Development, along with the Union City Redevelopment Agency and the statewide nonprofit, filed the suit Tuesday in hopes of nullifying a state bill passed in July. The state has mandated that city redevelopment agencies give back $2.05 billion over the next two years to fill gaps in the school budget, a move the plaintiffs call unconstitutional.

John Shirey, the executive director of the California Redevelopment Assn., said his group asked redevelopment agencies from across the state to volunteer to be plaintiffs, and more than 60 responded. In the end, he chose Union City and Fountain Valley because he believed they best represented the impacts of the legislation.

“This is economic investment that won’t occur,” Shirey said about taking away funds from redevelopment agencies. “At a time when the economy is suffering, when unemployment is in double digits, this is bad policy as well as being unconstitutional.”

Fountain Valley, according to the association, would have to pay back $3.3 million in redevelopment funds to the state by May 2010. Since the bill requires that the funds go to serve students living in the redevelopment area, Shirey said, that would mean spreading the $3.3 million among a mere 64 students who live in the part of Fountain Valley targeted for redevelopment.

That comes to about $50,000 per pupil — more than six times the average per-pupil spending in California. According to Shirey, that disparity would violate the state Supreme Court decision in the 1970s case Serrano v. Priest, which required that school districts be funded equally.

“This is exactly what happens when lawmakers don’t think things through,” Raymond Kromer, Fountain Valley’s city manager and executive director of its Agency for Community Development, said in a release. “You wind up with unintended consequences that clearly aren’t in anyone’s best interests, especially not the students’.”

Shirey, who expects the case to be in court in February, said he has asked the judge to make it a class-action lawsuit so that all redevelopment agencies in California can hold onto their funds.