(This article appears in the January 10, 2013 edition of the Tustin News – ed.) You could hardly pick up a newspaper or turn on a news broadcast these past few weeks without hearing about the Fiscal Cliff the country is facing. Here in Orange County, many cities, including Tustin, are facing their own fiscal cliff of sorts.
According to an Orange County Register story, the state recently demanded “that 19 Orange County cities and the county itself turn over a combined $263 million in unused funds previously earmarked for low- and moderate-income housing.”
“Some cities have already paid up, including Anaheim and Buena Park,” the article says. “Others are fighting the demand, saying the state’s calculations are wrong.”
Tustin’s share of that is $14.3 million dollars. The deadline to turn over the money was December 13th. Although there has been no mention of it on the agenda, the city has taken steps to return or justify the retention of the funds.
Tustin City Manager Jeff Parker said that at the time of the state’s request, $7.5 million dollars remained in the redevelopment fund with no foreseeable plans for use by the city. It has already been returned to the state.
The remaining $6.5 million dollars has been handed over to the state under a protest procedure, he said. Hopefully, that money will be returned as it had been earmarked for low and moderate income housing on the MCAS property.
Councilmembers Chuck Puckett and Beckie Gomez, and Mayor Al Murray did not return calls for comment.
What if the state refuses to return the money? “We may file a lawsuit against the state relative to the $6.5 million,” Parker said.
That could, at least give them a bit of breathing room and, face it — thanks to the long running lawsuits against Tustin Unified School — they are getting to be experts at frivilous litigation.
One thing is for sure: Paying the funds back could be a real financial problem for the city, although Parker assured me the bulk of the $6.5 million was paid out of land use funds with just a small amount coming from the General Fund reserves. He maintains that reserves are still above 20 percent.
At the beginning of this year, then-mayor John Nielsen promised to keep city reserves above 15 percent. It is quite possible that goal will be just a pipe dream when the state is through.