With the end of California Redevelopment December 29, 2011, cities are scrambling to grab assets and minimize their losses. As one reads in the news, Governor Brown stole our money and we are left with a mess. I don’t know about other cities, but I can tell you that Riverside created their own mess. Riverside has a long history of borrowing monies from our own local utility funds, they are the cash cows for cities. When the Hudson regime was crowned by Mayor Loveridge, Ed Adkinson, Frank Schivaone, Dom Betro, etc. this borrowing became exponential. The sewer, electric and water fund operate as an enterprise fund, essentially they are set up to make a profit. This profit is supposed to be used for maintenance, repairs, and operations, in the case of the sewer fund no new construction is allowed. The profit is saved for a rainy day and used to maintain our infrastructure. Well here comes FRED (Frank and Ed), Mayor Loveridge and a city manager willing to take our city into the deep dark hallows of debt. The borrowing frenzy began, funding pet projects, redevelopment activities, and favored developers was on.
The parking fund was born and we immediately borrowed 5 million from the sewer fund. This was the birth of the parking meters. One million dollars of the sewer fund went to the parking meters and the other four million went to fund the Taj Mahal, Orange Street parking garage. Well, this was easy, no one noticed, so let’s see what else we can spend sewer monies on. We have a developer who would like to build some luxury townhouse/condos (Raincross Promenade). Sewer fund monies again, the victim of greed and mismanagement. The city spent approximately 15 million dollars to assemble properties, demolitions, relocation, etc. Sewer fund 0, developer 15 million. There is a catch here. The city charter states that we can make inter-fund (between electric, water and sewer) loans, no mention of interagency (redevelopment is a separate legal agency) loans. Fast forward 2010. Over 21 million dollars was loaned out of the sewer fund to the City of Riverside Redevelopment Agency. One loan did not even have a contract in place so that the sewer fund would be able to be paid back. Who would have known that the first thing Governor Brown would do when taking office would be to end redevelopment. Oops.
ABX 126 passed,the court upheld this ruling and now we must comply. What does that mean for the sewer monies and the monies from all of the enterprise funds, sewer included. Bye Bye. The ruling states that these loans are unenforceable, sewer fund 0, redevelopment agency and the State of California 21 million. When you hear city leaders complain that the State of California is taking our money, our city leaders should have had the ethical and intellectual understanding to have not made illegal loans in the first place. Taxpayers 0, Sewerfund 0, Renaissance 21 million.
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UPDATE:04/02/2012: According to the Press Enterprise, CFO/Treasureer/ Asst. City Manager Paul Sundeen resigned in March. Once the reins of the finances are passed over, what will they find in the after math of Paul Sundeen’s world?
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