The demise of redevelopment agencies should not financially impact local schools, state and county officials have told Patch.

But whether Capistrano Unified School District has to honor past agreements with the cities in how it will spend that money is unclear.

Two local cities, Mission Viejo and San Juan Capistrano, had what’s called “pass-through agreements” with Capistrano Unified. In general, redevelopment projects in blighted were funded by borrowing money up front which was repaid by the higher property taxes.

But Capo and the cities entered into agreements that allowed the property taxes to pass through to the school district.

Even though the Legislature and Gov. Brown put the kibosh redevelopment agencies across the state, county auditor-controllers will continue funnel the money school districts have been receiving as always.

“The money can’t come to Sacramento. The money from property taxes can’t migrate out of the county,” said H.D. Palmer, spokesman for the state Department of Finance. 

The legislation that started the ball rolling was ABX26. It states:

This part is intended to preserve, to the maximum extent possible, the revenues and assets of redevelopment agencies so that those assets and revenues that are not needed to pay for enforceable obligations may be used by local governments to fund core governmental services, including police and fire protection services and schools.

The state Supreme Court upheld the new law in a late December ruling.

Frank Davies, property tax manager in the Orange County Auditor-Controller’s office, confirmed he will be directing the tax dollars to the school districts after first removing some funds to cover administrative costs.

Throughout the past 10 years, San Juan Capistrano has passed through, on average, $1 million a year to the Capo Unified, according to Cindy Russell, that city’s chief financial officer. According to a Power Point presentation shown trustees at a 2007 meeting, the district uses the pass-through to help pay the debt which built the district’s headquarters in San Juan Capistrano.

Mission Viejo passes through about $1.5 million a year, according to CUSD documents. But an agreement first struck in 1992 says the money can only be spent on schools in Mission Viejo, city officials said.

Whether CUSD must honor that agreement in a post-redevelopment world has Mission Viejo City Council members very concerned. They held a special meeting last week to discuss that and other redevelopment fallout.

“The pass-through you have with Capo is a public-improvements agreement, and it says the money shall be spent on school facilities, capital improvements, on schools located within the boundaries of the city of Mission Viejo,” Economic Adviser Celeste Brady told Mission Viejo council members last week.

“That the money actually be spent on schools in Mission Viejo, I don’t know if that will be enforced,” Brady told council members.

Davies said, however, it’s not the county’s job to enforce the previous agreement, only to deliver the funds to the school district.

“How that money is used, we have no control over it,” he said. Once the funds are delivered, “that’s where our responsibility will stop.”

Capo Unified spokesman Marcus Walton was first emailed questions about possible impacts of  redevelopment’s dissolution Jan. 10. Two subsequent emails were sent. Patch never received a response.

Councilwoman Patricia Kelley said school officials are bound to have questions of their own in these uncertain times.

“We don’t know. That’s the problem. Nobody knows,” Kelley said.