Redevelopment Elimination Threatens MUSD Budget

The ongoing redevelopment saga will have a significant impact on the 's bottom line next year, and if the state succeeds in killing the agencies, officials said funds shared with the district under a cooperative agreement would dry up.

Since 1990, Monrovia has shared a portion of the property tax revenues it receives through its redevelopment agency with MUSD, and the city recently cut the district a check for about $450,000 for the current fiscal year.

Those annual payments are in jeopardy, however, if the redevelopment agency ceases to exist--a very real possibility if the state wins in a court challenge to its redevelopment elimination bills being heard by judges in the California Supreme Court, Monrovia Mayor Mary Ann Lutz said.

"Truly, we don’t know what will happen after this payment.," Lutz said in an interview Wednesday. "The one thing we do know is that if redevelopment does in fact go away, we don’t have the money to give."

Lutz said in an address to the school board Wednesday that the city has transferred about $2.5 million to the district over the last six years. The agreement requires the district to spend the money on capital improvements agreed upon by the Monrovia Redevelopment Agency and the school board, according to a staff report written by David Conway, MUSD's director of fiscal services.

Because of uncertainty surrounding the redevelopment issue, the district had not budgeted any redevelopment revenue for the 2011-2012 fiscal year. MUSD Chief Business Officer Connie Wu said during the school board meeting Wednesday that the district was pleasantly surprised to receive the $450,000 payment, much of which could be transferred to the district's general fund.

Wu said the city's willingness to share in redevelopment revenue was unusually generous.

"The two previous districts I worked for, we did not get such a huge [amount of ] money from the city," she said.

The California Redevelpment Association , arguing that the legislature and governor's efforts to eliminate redevelopment were unconstitutional. That case is being heard by the state supreme court, and a decision is expected to be reached in January, Lutz said.

If the court rules in the state's favor, redevelopment in Monrovia will die a slow death, Lutz said. In order to keep a redevelopment agency, cities are required to make an annual payment to the state, which local officials describe as a "ransom."

In July, Monrovia , but a stay issued by state supreme court justices effectively freezes redevelopment agencies from doing business until the court case is resolved. That ruling has , which had agreed to purchase land in Monrovia for a maintenance yard to expedite the Gold Line Foothill Extension.

The "ransom" payments will increase over the coming years if the state has its way, Lutz said, eventually bankrupting the agency and cutting off a source of revenue to the district.