Redwood City cannot keep more than $10 million set aside for affordable housing in the city because they had not yet been committed to special projects, according to a judge who also ordered the money paid to local taxing entities.
The city and the Legal Aid Society of San Mateo County had challenged the state over the housing funds and last year sought a court order to prevent California from reclaiming the money. The city’s now-defunct redevelopment agency had accumulated funds above and beyond the mandated 20 percent for low- and moderate-income-level housing. But when the state dismantled each of its redevelopment agencies, Redwood City was told to turn over all the tax increment revenue — including the money exceeding the 20 percent set aside — to the county controller.
The city planned to use the money to develop sites on Bradford and Heller streets which it absorbed as the redevelopment agency’s housing successor agency. The money was also to help with development of other affordable housing projects.
In its suit, Redwood City challenged the state Department of Finance’s label of the $10.2 million collected under the Legal Aid agreement as “uncommitted funds.”
The city argued it had an obligation to the community and the nonprofit to keep the housing fund for its intended purpose but Judge Allen Sumner ruled otherwise.
City officials said they are considering whether to appeal the decision which they called a legal setback in the city’s mission to provide affordable housing for residents.
“This is not just about Redwood City. This is about local agencies’ ability to create communities that people of all incomes can live in. I do not believe that the Legislature intended that we should not be able to honor our commitments under the Legal Aid Agreement,” Redwood City Mayor Jeff Gee said in a prepared statement.