County takes on more than $400 million in debt as Redevelopment Agency folds.
Thursday, February 9, 2012
As Monterey County’s former director of redevelopment and housing, Jim Cook would have lost his job when California’s 425 redevelopment agencies dissolved Feb. 1. But he was spared unemployment when officials chose him to lead the county’s new Economic Development Department, formed last March.
But the financial future is still a moving target as Cook and his staff work to retool; he says it looks like redevelopment dollars could be reduced by one-third. “But we’re looking at all our obligations to determine what projects and revenues will survive,” he says.
With redevelopment slashed, the county now inherits its unfinished projects – and a debt bigger than the price tag on the now-defunct Regional Desalination Project. The estimated tab on what the former County Redevelopment Agency owed, mostly to developers, engineers and project consultants: more than $426 million.
That amount is likely to shrink as the county drops projects, like the $3.5-million last phase of a storm-drain improvement effort in Salinas.
“Because the law is so poorly drafted, it’s impossible for me to say exactly what’s going to happen,” Cook says.
Redevelopment agencies folded after a Dec. 29 California Supreme Court decision upheld AB 26, which eliminates the local vehicles for funding projects with tax increments. In their wake comes an aggressive timeline for successor agencies to pick up their responsibilities; audits of assets and liabilities are due to the state by July 15.
Not all redevelopment projects are destined for the shredder. A park in Pajaro relying on a $5 million state grant will go forward, and Cook expects housing at East Garrison to proceed as planned because contracts pre-date the demise of redevelopment agencies.
“Nobody has talked about walking away,” he says.
Developer Jim Fletcher of Union Community Partners, for example, still expects to collect $24 million for the East Garrison project. “We’re operating under the assumption that there will be a successor agency that will live up to the obligations of the Redevelopment Agency,” he says.
But County Supervisor Dave Potter says it’s too soon to commit funds in this rapidly changing environment. “To say there are county resources to offset this is delusional,” he says. “We don’t have the resources to backfill this thing.”
Potter and Cook both see a glimmer of opportunity in redevelopment’s absence. Gone is the ability to buy and sell land at a discounted rate, a perk once used to beckon developers. But that may force the Economic Development Department to focus on its intended mission of leveraging existing resources for maximum job creation, Cook says.
“I really don’t see us entering into redevelopment-like agreements with private developers in the future,” he says. “The entire economic development strategy is built around the premise that we don’t need more development.”
At least one private developer sees a bleak future for post-redevelopment Fort Ord.
“There is no way you can remove the blight without tax increments,” says Brian Boudreau, developer of the proposed Monterey Downs horse park. “It’s going to look like it does now forever, unless these new projects get going.”