Lucia Mar may fight for Redevelopment Agency funds

As the Pismo Beach City Council moves closer to dissolving its Redevelopment Agency, Lucia Mar Unified School District officials are bracing for a fight to get the money they say could be used toward facilities, maintenance and other improvements at their 17 schools.

“If they take the money away, we never see it again,” school board President Colleen Martin said Wednesday. Litigation is likely if the agency is deactivated, she said.

Pismo Beach City Manager Kevin Rice said there’s still time for the two entities to reach a renegotiated agreement.

“Both sides I believe have been negotiating in good faith over the last year and a half,” he said. “If we don’t reach an agreement, we’re probably on the pathway of both sides paying a lot of money to attorneys.”

The City Council on Tuesday moved closer in the process of deactivating the Pismo Beach Redevelopment Agency — an entity formed to improve areas of the city that are economically or physically blighted.

The council voted 4-0 to consider dissolving the Redevelopment Agency at a future meeting, which could happen as soon as Aug. 3. Mayor Mary Ann Reiss was absent.

The action comes because city officials say there is no blight left in the redevelopment area to address, and the agency has no unpaid loans, indebtedness or legally binding contractual obligations.

School district officials say the agreement the district and the agency made in 1988 is a form of indebtedness.

The school district had signed an agreement with the Redevelopment Agency upon its formation to not take its share of property tax increases for 20 years.

When a redevelopment agency is formed, it caps property tax revenue that counties, schools and other entities receive from the project area.

As property tax revenue grows through the years, most of that added money is directed instead to the Redevelopment Agency.

As part of the agreement, the Redevelopment Agency is supposed to make payments to Lucia Mar for the following 20 years. That amount would vary based on property tax revenue.

The payments to the school district started last fiscal year; Lucia Mar received $445,601.

If the agency is dissolved, the district would not receive the annual payments, and the state would not give the district any additional money to make up for the loss of facilities funds, according to Lucia Mar officials.

The move to dissolve the agency is necessary, city officials said, because it will soon be operating in the red. That’s because of a combination of several factors.

Those include the Redevelopment Agency’s financial obligations to Lucia Mar; the hundreds of thousands of dollars the state has taken from redevelopment agencies statewide to pay education obligations; and a requirement that redevelopment agencies set aside 20 percent of their funds for low-and moderate-income housing.

And Pismo Beach can’t use that money to pay the school district.

The Redevelopment Agency had to give $316,000 to the county to fulfill the state’s local education obligations and must send $65,000 to the county this fiscal year.

That puts the agency nearly $37,000 in the red — and it would continue to operate in the red until it was dissolved.

Plans for money

Lucia Mar administrators hoped to use some of the money to match state funds to build or upgrade facilities for its agriculture, automotive and engineering academies at Arroyo Grande High School.

It can also be used for deferred maintenance and to increase facilities’ energy efficiency, Martin said.

The savings, she said, could go into the general fund, which could be used in classrooms and toward teacher pay.

In the meantime, council members said, they hope to continue negotiating with the school district.

City Councilwoman Shelly Higginbotham, whose three children attended Lucia Mar schools, commended the district, but added, “This isn’t about my children’s experience. … We have to provide police and fire and water and streets and all of the services to our citizens.

“This council is committed to trying to come up with an agreement that will work … but we have to do our jobs as well.”

Martin said Wednesday it may be difficult to pull together board members and staff before the council’s August meeting, as July is typically a quiet month for the district, with no board meetings and some staff on vacation.

Reach Cynthia Lambert at 781-7929. Stay updated on Twitter by following @SouthCountyBeat.