County maintains redevelopment lawsuit threat
July 13, 2010
SOUTH LAKE TAHOE, Calif. – The South Lake Tahoe City Council moved closer to resolving a conflict with South Tahoe Public Utility District over Redevelopment Project Area No. 2 at its regular meeting on Tuesday.
But the El Dorado County Board of Supervisors continues to oppose creation of the area, which the City Council approved in May. Supervisor Norma Santiago reiterated a previous threat of litigation in a July 8 letter to Mayor Kathay Lovell.
The letter focuses on supervisors’ contention that the city did not make the necessary blight findings for the creation of the redevelopment area centered at the “Y” in accordance with California law.
In the letter, Santiago asks the city to rescind the resolution adopting the redevelopment plan, revise the plan documentation and reduce the size of the project area “to satisfy redevelopment law.”
“Unless the city acts immediately, the county will have no option but to initiate litigation to preserve its legal challenge to the adopted Redevelopment Plan,” Santiago wrote in the letter.
The new redevelopment area will allow the South Tahoe Redevelopment Agency to divert a percentage of property tax increases in the area during the next 45 years for a variety of purposes, including infrastructure and affordable housing.
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The county estimates it could lose between $4.6 and $17 million in property tax revenue depending on the growth of property values in the area.
Proponents at the city contend increases in property values will keep property tax dependent agencies from seeing any decreases in revenue because of the redevelopment area.
On Tuesday, Lovell said she was “disappointed” in Santiago’s letter.
The redevelopment “certainly meets the definition of blight” and the county’s opposition to the area may be a panicked response to budget problems, Lovell said.
She said a tentative agreement with South Tahoe Public Utility District – which previously voiced opposition to the redevelopment area – should let the county know the city is willing to work through any outstanding issues.
In her letter, Santiago contends the city has not had “meaningful discussion” with the county regarding objections to the redevelopment plan.
After more than a month of discussions, the city reached an agreement with the utility district on Tuesday that will prevent the district from opposing the redevelopment plan.
The city will receive 2,500,000 cubic feet of free water each year for the next five years from the district as part of the agreement. The district has provided the city with nearly that amount of water since the city’s inception as part of historic agreements that lapsed in June 2009, said district spokesman Dennis Cocking.
In return, the city won’t levy a 1.5 percent surcharge on capital improvement projects and will sell improvements of the Lukins Brothers Water Company funded by public grants through the city or redevelopment agency to the utility district for a “nominal fee,” where legally allowed.
Also under the agreement, the South Tahoe Redevelopment Agency will be responsible for the cost of repaving roadways within the redevelopment area following its own projects, even if the work includes water or sewer line replacements conducted by the utility district.
Outside of the redevelopment area, the district will still be responsible for repaving roadways following water and sewer line replacement projects.
Cocking called the agreement a “win-win” for both entities.
“I think this is what (customers) expect us to do: find a way to get to ‘yes,'” Cocking said.
The City Council tentatively approved conditions of the agreement by a 3 to 0 vote on Tuesday.
Councilman Hal Cole recused himself from discussion on the agreement because of his ownership of property within 500 feet to the redevelopment area. Councilman Bill Crawford had left the meeting prior to the discussion due to family medical emergency.
The agreement requires final approval by the city and the utility district’s board of directors.