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State denies Carlsbad’s funding request

CARLSBAD — The California Department of Finance has denied the city about $1.6 million in redevelopment fund requests for building improvements and loan repayment for the first half of this year. 

Carlsbad will probably resort to suing the state to obtain the redevelopment funds, although the city is considering all options at this time, said Debbie Fountain, Carlsbad’s Director of Housing & Neighborhood Services.

With 88 percent of its funding requests denied, Carlsbad lost the highest percentage of any San Diego agency.

Other agencies in the county were also denied large portions of their requested redevelopment funding.

Carlsbad has had to request funds from the state for redevelopment projects and loan repayment since state legislation mandated the dissolution of all redevelopment agencies by Feb. 1, 2012.

“(The state is) not really looking for compromise to be quite honest. They are looking to shut down the redevelopment agencies and get as much money as they can back,” said Fountain.

Established in 1979, the Carlsbad RDA (Redevelopment Agency) was once responsible for the improvement of city buildings that had fallen into disrepair.

The RDA’s operations were primarily funded by property tax increments, but also from loans from the city’s general fund.

The City of Carlsbad assumed responsibility for gradually winding down the RDA’s operations after its closure. This task included obtaining repayment from the state’s Department of Finance for the outstanding $18 million plus interest loan that the RDA had received from the city’s general fund.

For its Recognized Obligation Payment Schedule funding request for January through June 2013 to the state, Carlsbad asked for $1 million to improve the New Village Arts building and $641,255 as partial reimbursement for the former RDA’s loan.

The state denied these funds in a letter to the city on Dec. 18, granting the city only $352,333 for redevelopment.

The Department of Finance’s denial of the city’s reimbursement request has been “a constant frustration for the city,” said Fountain.

If Carlsbad is unable to obtain the necessary funds from the state, the city will have to hold or cancel redevelopment projects like the improvements to the New Village Arts building, Fountain said.