Community members challenge Fontana’s $1.5 billion debt to private developer

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Two community groups and a San Bernardino County citizen recently filed suit in Sacramento challenging the City of Fontana’s illegal commitment to pay a $1.5 billion debt to a private developer with County property tax funds. To finance the infrastructure development in the Jurupa Hills Area, Fontana agreed to pay developer Ten-Ninety, Ltd. 15.5% interest on a principal debt of $174 million, increasing the total debt to $1.5 billion. Fontana then illegally pledged to pay the debt with property tax revenue that would otherwise be used for much-needed County services.

Alleging that the financing structure violates new restrictions imposed on former redevelopment agencies, Librería del Pueblo, Inc. and others request a court order preventing Fontana from using property tax revenue to pay Ten-Ninety’s debt. Librería del Pueblo is a community-based non-profit serving the needs of low-income, immigrant and Spanish-speaking residents of the Inland Counties region, including Fontana. The California Partnership and former Fontana resident Virginia Macy also have joined the lawsuit.

“Three years ago, the California State Legislature adopted new laws to help curb abusive financial schemes that had been implemented by some redevelopment agencies. A few bad actors upset the redevelopment apple cart and Fontana was one of them,” says Lynn Martinez, an attorney with Western Center on Law and Poverty in Los Angeles. “In 1987, Fontana promised its citizens that it would only spend $135 million to develop Jurupa Hills. It now owes $1.5 billion and that amount is increasing. Fontana is siphoning over a billion dollars away from Fontana residents, many of whom would benefit greatly from the legal use of these tax dollars.”

The Agreement also requires Ten-Ninety to repay 35% of the annual tax revenue it receives back to the City. These payments are then added back into the total debt owed to Ten-Ninety and subject to the 15.5% interest rate. “Fontana discreetly returns 35% of Ten-Ninety’s payment back to itself by funneling the money through a fiscal agent account. Kicking back this money also violates state laws that prohibit the City from receiving property tax revenue,” Martinez said.

Librería del Pueblo and its co-petitioners also are represented by the Public Interest Law Project and Kirkland and Ellis, LLP.

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