Housing Funds May Be Tapped for Overpasses

In an unusual financing scheme, Lancaster officials are proposing to build two highway bridges over railroad tracks for $24 million by tapping into a special fund that state law says must be used to promote housing for low-to-moderate-income residents.

City officials said the plan, tentatively approved by council members Monday night, meets the letter and spirit of the law by including provisions to also promote lower-cost housing. But a Lancaster homeowners organization and a Los Angeles law firm that specializes in redevelopment law have questioned its propriety.

Under state law, redevelopment agencies such as Lancaster’s must set aside 20% of their tax increment monies--increases in property tax revenues coming from redeveloped areas--to build, aid or improve housing for low-to-moderate-income families.

Under the plan approved Monday, the city would issue bonds to pay for the two $12-million overpasses. The bonds would be repaid by money in the city housing fund--both the money now on hand and the income expected in the future. The projects would ease car traffic that now is blocked by frequent trains that travel a north-south railroad line that bisects the city.

To promote lower-cost housing as part of the plan, the city is proposing in turn to waive up to 90% of its current $1,012-per-house traffic improvements fee for those developers who set aside at least 15% of their units for families with low to moderate incomes. Fees paid by developers who do not accept the option would go into the lower-cost housing fund.

“We believe it’s a program that can work and will be very effective in achieving both goals� of promoting lower-cost housing and enabling the city to build the long-sought overpasses, said City Manager Jim Gilley. He and City Atty. David McEwen both said they are convinced the proposal is legal.

However, attorney Kathryn Reimann of the Los Angeles law firm Kane, Ballmer & Berkman, which represents redevelopment agencies in Los Angeles and more than 20 other cities, said in an interview that she doubts that using Lancaster’s housing funds to pay off debt for two overpasses would comply with state requirements.

“You’re supposed to spend this money building housing,� Reimann said. She said state law sharply defines the appropriate purposes for such housing funds, and expenditures outside those boundaries could be challenged in court.

Lancaster Redevelopment Director Steve Dukett said the city plans to take its proposal to a Superior Court judge for a ruling to ensure that there are no legal risks. City officials acknowledged that they knew of no comparable use of such housing funds elsewhere.

A leader of Lancaster’s main homeowner group told council members Monday night that he too had legal concerns about the plan. Richard Wood of the Lancaster Coalition of Neighborhood Organizations urged city officials to explore the program carefully before proceeding.

The money raised by selling the city bonds would pay for overpasses at Avenues H and L where they cross the Southern Pacific railroad line along Sierra Highway. Both crossings would be part of a planned peripheral loop of main streets--Avenues H and L, 50th Street West and 20th Street East--that would carry large volumes of traffic around the city.