SJ, Santa Clara Co. at odds over redevelopment funds

San Jose

March 9, 2011 6:48:18 PM PST
It is neighbor against neighbor in the South Bay where Santa Clara County filed a lawsuit against San Jose on Wednesday. The lawsuit accuses the city of a money shuffle that cheats the county out of tens of millions of dollars.

San Jose is trying to protect its redevelopment money from the state legislature but that shell game has now resulted in this lawsuit. Santa Clara County is suing San Jose for its share of redevelopment tax revenue.

"When you are a creditor and you're owned money and you see that happening, you see money being moved, assets being moved. You have to respond in a hurry," Santa Clara County Board of Supervisors President Dave Cortese said.

The lawsuit points to a tax sharing agreement between the county and city in 2001 and when the recession hit, San Jose stopped making it's payments. The county claims its owned $55.9 million since 2008 and another $7 million in interest payments for a total past due bill of $62.9 million.

San Jose Mayor Chuck Reed doesn't dispute the numbers, but puts the blame on the state.

"The state's actions are promoting us to act and protect our interests and the county needs to protect its interests," he said.

Many business leaders are shaking their heads at the idea of a lawsuit at taxpayer expense.

"I would have much preferred them to sit down like neighbors using the same bank account in this case, the taxpayers and try to come to some sort of resolution," San Jose Silicon Valley Chamber of Commerce CEO Pat Dando said.

Attorneys representing Santa Clara County said they've been talking nice with the city since late 2009 and the development issue forced their legal hand.

"In this situation, we have a contract. We have a legal and morally binding agreement with the city," Assistant County Council Orry Korb said.

The County and the City will be in court on Monday morning. Santa Clara County is asking a judge to stop the city from transferring any more assets out of the redevelopment agency.

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