The Adelanto Redevelopment Agency (agency) is responsible for preparing and implementing redevelopment plans designed to eliminate blight within the territorial boundaries of the City of Adelanto (city). Under the Community Redevelopment Law (law), the agency may raise funds for redevelopment projects by issuing bonds, selling or leasing redeveloped property, and collecting tax increment revenues. Tax increment revenue is that portion of property taxes that is attributable to added property value caused by redevelopment efforts. However, the law requires that the agency use 20 percent of its tax increment revenues to increase, improve, and preserve the community's supply and its regional share of low- and moderate-income housing, unless the agency meets the legal requirements to claim exemption to the set aside provision.
The purpose of this audit was to determine whether the agency's redevelopment fund expenditures complied with the law. Specifically, we were requested to determine the extent to which the agency has used redevelopment funds to acquire George Air Force Base (GAFB) and to pay for legal actions against neighboring communities and an adjacent redevelopment agency.
We determined that the agency has inappropriately spent funds in an attempt to redevelop GAFB, and the agency spent some funds relating to GAFB for legal fees relating both to the environmental impact of the proposed reuse of GAFB and to water rights issues, which appears to be an appropriate use of redevelopment funds. GAFB is located outside the agency's territorial jurisdiction. The agency's territorial jurisdiction is defined by the law as the boundaries of the city. In addition, our audit revealed that although the Adelanto City Council (city council) discussed redevelopment projects in public meetings, it did not always follow the Health and Safety Code and Brown Act requirements to keep the public informed of the decisions made by the city council and the purposes for which the agency spends redevelopment funds. Further, we found that the agency did not meet the purposes of increasing, improving, or preserving the community's supply of low and moderate-income housing when it paid for part of the cost of the city's police and fire facilities from the Low and Moderate Income Housing Fund. Finally, the agency claimed exemption to the requirement to set aside 20 percent of its tax increment revenue for low- and moderate-income housing before it fully documented that no need existed for additional low- and moderate-incoming housing in the community or that its regional share of such housing was adequate. A more specific discussion of these conditions follows:
We recommend that the agency develop and implement procedures to ensure that agency expenditures comply with the law. In addition, the city and agency should follow the requirements of the Health and Safety Code designed to keep the public informed of the purposes of agency expenditures. We further recommend that the city ensure that it has identified its needs for low and moderate-income housing before it takes steps to commit available funds for other purposes. Finally, the agency should reverse its acquisition of city-owned property and the city should prepare and implement a plan to repay all its debt to the agency.