Dash for Cash
Cities prepare battle plans as state plans to grab local bucks.
Thursday, February 3, 2011
Gov. Jerry Brown’s proposal to eliminate redevelopment agencies as part of his effort to plug a $25 billion budget gap has cities – including at least nine in Monterey County that have such agencies – gearing up for a full-scale rebellion against the governor’s plan. At stake, according to city officials, are millions of dollars that help jump-start development and turn seedy areas into sleek economic engines.
“It throws the entire multi-billion dollar system that’s been developed over decades, and it just vaporizes it,” says Salinas’ Community Development Director Alan Stumpf.
Monterey’s Cannery Row is one example of a local redevelopment project. So is the Steinbeck Center and the Maya Cinemas on Main Street in Salinas.
In his state of the state message, Brown noted the fierce local opposition to his plan, but warned he’d stand firm, saying redevelopment dollars strip vitally needed cash from local property tax revenues.
“It is a matter of hard choices and I come down on the side of those who believe that core functions of government must be funded first,” Brown said.
Jean Ross, who directs the California Budget Project, a Sacramento-based think tank, agrees.
“Redevelopment activities don’t bring in enough additional revenue to make up for losses to cities, counties and schools. It’s a net loss to the budget in terms of cost.”
Redevelopment agencies are generally governed by city councils and granted state authority to issue bonds to fund infrastructure improvements and purchase land for development within an area that has been designated blighted.
Once properties are developed and values rise, the agencies are allowed to siphon off a portion of the increased taxes instead of sharing them with schools and local general funds.
In Salinas, for example, the redevelopment authority assembled the parcel of land on which the Maya Cinema sits and built a nearby parking lot to make the area more attractive for development. Now, the Central City redevelopment area, and another in East Salinas, together take in some $6 million annually. Monterey collects some $3.5 million.
Cities are required to spend 20 percent of their funds on affordable housing
“It’s an opportunity to turn neighborhoods around with infrastructure improvements,” Stumpf says.
The Salinas City Council was expected to pass a resolution denouncing the governor’s proposal at its Feb. 1 meeting.
The California League of Cities and the California Redevelopment Association have partnered to rally supporters, including cities, building contractors, building trades unions, public safety personnel and affordable housing advocates to take similar action and lobby legislators.
Democratic legislators are in a tough spot – attempting to respond to constituents in city and county government while also backing the governor.
“We have to look at all of this in the totality of the budget crisis,” says Assemblyman Bill Monning (D-Carmel). “There are no sacred cows. No one is protected.”
Sen. Sam Blakeslee (R-San Luis Obispo) didn’t return calls for comment.
Brown will likely find ammunition for his position in a handful of recent studies that show that some agencies waste funds and others, like Marina’s, fail to spend money on affordable housing as required.
Marina was among 12 California cities singled out for rebuke in a September 2010 report for not spending any redevelopment funds to building affordable housing.
Still, the report prepared by the California Senate Office of Oversight and Outcomes for the Senate Rules Committee notes that the city plans nearly 1,000 low-cost units, and says part of the reason for the agency’s lagging performance is that the redevelopment area is relatively new and has generated little tax revenue. Its efforts may have also been slowed by the massive task of cleaning up former Fort Ord land and planning for the base’s reuse.
Neither Marina City Manager Anthony Altfeld nor Mayor Bruce Delgado returned calls for comment.
As the debate in the legislature gets underway this week with hearings in Senate and Assembly budget subcommittees, State Controller John Chiang plans an audit of 18 of the state’s redevelopment agencies, none of which are in Monterey County.
California Redevelopment Association spokeswoman Krista Noonan reports the Department of Finance and mayors of the state’s nine largest cities have formed a working group to attempt a compromise with the governor. Some cities are reportedly trying to spend or obligate their redevelopment cash before it’s snatched away.