$22 Million Down, $410 Million To Go In Fight With State For Airport Funding

The Inland Valley Development Agency and the San Bernardino International Airport Authority have made some progress in their legal battle with the state of California, securing $22 million of the $432 million they say they were deprived of in a miscarriage of the state’s authority.
Known by their acronyms, IVDA and SBIAA, the Inland Valley Development Agency, consisting of the county of San Bernardino and the cities of San Bernardino Loma Linda and Colton, and the San Bernardino International Airport Authority, consisting of the county and the cities of San Bernardino, Colton, Loma Linda and Highland, are joint powers authorities formed to facilitate the transition of the former Norton Air Force Base into a civilian airport. IVDA exists to build up the property around the airport and SBIAA exists to develop the airport itself.
Last year, at Governor Jerry Brown’s prompting, the state legislature passed two laws, AB X1 26 and AB X1 27, which shuttered county and municipal redevelopment agencies up and down the state. Those redevelopment agencies had used a variety of funding mechanisms, including bond financing and state and federal tax pass-throughs to develop or improve infrastructure, spur development and eliminate blight. Assembly Bills X1 26 and X1 27 ended redevelopment programs and routed much of the money to law enforcement, education and other programs.
IVDA and SBIAA officials maintain that their agencies are not traditional redevelopment agencies in that both were formed to facilitate the civilian reuse of what was formerly federal property and that as such they are exempt from SB X1 26 and SB X1 27.
The state contends differently, however. A provision of SB X1 26 and SB X1 27 is that any challenges pertaining to them must be heard in Sacramento Superior Court.
In addition to a number of bureaucratic filings pertaining to the matter they have lodged in Sacramento, IVDA and SBIAA have filed suit against the state, asserting those two entities should not have been classified as traditional redevelopment agencies and shuttered under SB X1 26 and SB X1 27. They maintain that they are entitled to $432 million in tax increment revenue from property taxes around the airport over the next decade to pay for airport construction, on- and off-site improvements and infrastructure and to cover cash incentives to commercial airlines to convince them to fly into and out of the airport.
While IVDA and SBIAA are pressing on with their lawsuit and claims, they are stepping up their efforts to use other means of dialoging with the California Department of Finance in an effort to show they are entitled to the money. There was an indication of a crack in the state’s position when the Department of Finance’s response made no claim that IVDA and SBIAA were not entitled to the $432 million but rather that they  had no existing contracts to utilize the money.
During a meeting between the San Bernardino County auditor-controller and officials with the state Department of Finance, state officials agreed to set the tax revenue IVDA and SBIAA are claiming aside in a sequestered account and that the money could be disbursed for any “approved,” i.e., contracted for, obligations the agency can demonstrate. Simultaneously, the Department of Finance reconsidered its blanket denial of the $432 million claim, finding that $22 million in tax revenue for road improvements near San Bernardino International Airport, including improvements to San Bernardino’s Mountain View Avenue Bridge, would be made available to IVDA. The state continues to deny the validity of the agencies’ claims to the remaining $410 million. IVDA and SBIAA are redoubling their appeal of that portion of the decision.
While both IVDA and SBIAA have enough money in terms of membership dues paid by their constituent members to continue to operate over the next several months, eventually obtaining the $410 million the state is denying them would be crucial to the survival of the airport development effort.
If the state’s Department of Finance relents and passes the remaining $410 through to SBIAA and IVDA, the lawsuit will be dropped. If not, the case in Sacramento Superior Court will proceed.

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