Grand Jury Work Environment

Recommendations 1

• R5

  Page 106
  SCLAA Bond Expenditures • The Victor Valley Economic Development Authority (VVEDA) Joint Exercise of Powers Agreement stipulates the uses of tax increment that is raised on parcels of the former George Air Force Base (GAFB), as well as the tax increment from the member jurisdictions’ territories. The VVEDA JPA specifically requires that tax increment revenues, which are to be allocated to GAFB shall only be used for purposes that directly benefit redevelopment of GAFB. The VVEDA JPA also delegates the authority of the management and operation of the GAFB parcels, including budgeting authority, redevelopment authority, and all management and operational authority to the Victorville City Council, “which shall act on behalf of the [VVEDA] Commission on all such matters.” • The Victorville City Council, acting as the Southern California Logistics Airport Authority (SCLAA) Board of Directors, and City management mishandled SCLAA bond funds in three separate instances. • In late 2005 and early 2006 the City, through its Redevelopment Agency, inappropriately purchased several parcels near city hall for the purpose of constructing a library using nearly $2 million of SCLAA bond funds that were restricted for the development and redevelopment of GAFB and not disclosed in the bond’s official statements. Attempts to correct the inappropriate use of such funds have been inadequate. • In June 2005 the City purchased land for the I-15/Nisqualli Road interchange project using approximately $3.3 million of SCLAA bond funds. Although this project was listed in the bond disclosures, the expenditure was weakly justified. Further, the City has no controls to ensure that funds restricted to GAFB were not used for this expenditure. • From June 2005 through 2010, the City procured professional services, land, and power generating equipment for the Victorville Power Plant 2 (Victorville 2) project using over $76 million of SCLAA bond funds that were restricted for the redevelopment of GAFB. City management has asserted that the power plant, which was to be built on parcels near GAFB, would benefit the redevelopment of GAFB by helping to attract commercial tenants with competitively priced electricity. However, official documentation of the project shows that it was primarily for the purposes of providing the City a revenue stream and to secure competitively priced electricity for its constituents and potentially for other jurisdictions in Southern California. Harvey M. Rose Associates, LLC 5-1 Section 5: SCLAA Bond Expenditures VVEDA JPA Stipulates the Development and Redevelopment of GAFB and the Surrounding Redevelopment Project Area The Victor Valley Economic Development Agency (VVEDA) was created in 1989 through a JPA between Victorville, Hesperia, Apple Valley, and the County of San Bernardino1 in response to the economic repercussions of the imminent closing of GAFB. In 1993 the VVEDA members established the original boundaries of the Victor Valley Project Area consisting of portions of each member’s jurisdictional boundary within an eight mile radius of GAFB. The VVEDA currently operates under the Fourth Amended and Restated JPA, which provided for the inclusion of the City of Adelanto in 2000. The current JPA enables each member entity to enter into transactions and execute agreements within their respective portions of the VVEDA project area without approval of the full VVEDA Commission, provided that any pledged tax increment revenue would be allocable to that member. The VVEDA JPA provides for the delegation and assignment of the member jurisdictions’ voting rights with respect to all issues directly affecting the operation and redevelopment of the former George Air Force Base to the Victorville City Council acting as the SCLAA Board. The responsibilities delegated to the City Council for SCLAA include: (1) all budgeting authority; (2) all redevelopment authority; and, (3) all operational and management authority affecting the GAFB parcels. Essentially, the Victorville City Council, acting as the SCLAA, has the authority to redevelop, operate, and manage all aspects of the former GAFB, now known as the Southern California Logistics Airport (SCLA). Notably, the City of Victorville fulfilled the responsibilities for the treasury function of VVEDA (separate from its responsibilities over SCLAA finances) until 2009, when the VVEDA Board transferred such responsibility to the City of Apple Valley. VVEDA JPA Stipulates the Allocation of Tax Increment Revenues The VVEDA JPA sets out how tax increment revenues are to be divided and allocated between the redevelopment of the former GAFB and the surrounding project area. The VVEDA JPA also places restrictions on certain portions of the tax increment revenues to be set aside for low and moderate-income housing and for eligible annual reimbursements to member jurisdictions for outstanding balances of prior contributions. As illustrated in Chart 5.1 and Chart 5.2 below, the VVEDA JPA sets specific restrictions on the allocation of tax increment revenues raised on and off the GAFB parcels to comply with State redevelopment law and to ensure that there are sufficient resources to develop and redevelop the former air force base. The County of San Bernardino Redevelopment Agency was the authorized recipient of tax increment accrued within unincorporated areas of the Victor Valley Project Area. Harvey M. Rose Associates, LLC 5-2