CLEARLAKE – Clearlake officials are trying to determine if the city's Redevelopment Agency has developed a fund surplus that could result in the agency being shut down.

Interim City Administrator Dale Neiman reported the issue to the City Council late last month.

“The first week I was here I looked at the budget, and I had a big question mark as to the Redevelopment Agency,” Neiman explained in a recent interview.

In February, he said, the city received an e-mail from the state Department of Housing and Community Development indicating the city might have an excess fund surplus in the Redevelopment Agency's Housing Set Aside Fund.

Redevelopment agencies are required to spend money on low- and moderate-income housing, Neiman said in his council report, but in the past many such agencies have been slow to fulfill that obligation, wanting instead to work more on economic development projects.

In response, the state imposed more restrictions over the last 20 years to encourage the agencies to spend money, including one regarding “excess surplus,” Neiman explained.

He said excess surplus means “an unexpended and unencumbered amount in the housing fund that exceeds the greater of $1 million or the total amount deposited in the housing fund during the preceding four years.”

Redevelopment agencies, he said, have some options, including transferring the funds to a housing authority within a year of the funds becoming excess, or spendings the surplus funds within a three-year period from the surplus determination.

If it fails to do that, he said, the agency will be prohibited from taking on any additional funds or spending any monies. “This means the agency will essentially be shut down,” he told the council.

I am working with Mike to determine how long we have had an excess surplus and will explore ideas on how to use the money to solve the problem we have.

Neiman said recently that he believes the main part of the Clearlake agency's problem emerges from a bookkeeping issue.

He said he's found revenues booked in relation to a litigation settlement from 1999-2000 that was twice recorded.

Clearlake Housing Now sued the city, he explained, alleging that the city's housing set aside funds were used to purchase the Austin Resort property, an action not in keeping with state law.

As part of the settlement agreement, the Redevelpment Agency is paying back the housing set aside fund $654,000. It's that amount that Neiman said he's seen come up twice in the city's books.

“There's no question that we're counting the money twice,” he said.

 

Neiman said he's asking the auditor to look at the issue, which could solve the surplus immediately, he said.

Still, Neiman said the city does need some low-income housing projects or else it will find itself in a very real excess fund situation.

Twenty percent of the Redevelopment Agency's net revenues are to be devoted to helping with housing for low- and moderate-income residents, he said. The state defines low income as 50 percent of an area's median income, said Neiman.

The U.S. Census Bureau's latest numbers for Lake County – which come from 2003 – report the county's median household income is $31,111, compared to the statewide number of $48,440.

That would mean a Clearlake family making $15,555.50 and less would be eligible for low-income housing through the Redevelopment Agency.

Neiman, whose the council will considering hiring permanently at its March 22 meeting, said the city needs to be aggressive in bringing new housing projects and, and he's looking for such projects to take to the council.

“If we don't get moving we're going to be facing this problem again,” he said.

E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it..

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