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Future Of City Redevelopment Agency Still Uncertain

POSTED July 6, 2011 1:03 a.m.
The saga that has centered on preserving Oakdale’s redevelopment agency is still filled with as much jarring and ups and downs in the legislative arena as an eight-second ride on the back of a bull in a rodeo arena.
On Tuesday, June 28, Democrats in the state Legislature approved an $86 billion spending package using more spending cuts, tax revenues, and new fees that are expected to be challenged in court.
“Putting our state on a sound and sustainable fiscal footing still requires much work, but we have now taken a huge step forward,” Governor Jerry Brown said in a released statement after the budget package passed.
The same period the budget was passed, the state legislature passed two bills – Senate Bill 15 and Assembly Bill 27. One eliminates redevelopment agencies and the other allows them to continue by making a one-time payment to the state to help balance the budget. The measures are linked to each other, meaning one cannot take effect without the other.
Oakdale Finance Director Albert Avila said that if the city agrees to the state “extortion” and consents to make the payments as provided in the bills, the Oakdale Redevelopment Agency would continue to exist, but would be required to pay an amount based on the estimate by the California Redevelopment Association.
For the City of Oakdale this would amount to $835,604 in the 2011-2012 fiscal year and $196,613 in the 2012-2013 fiscal year. The amount of future years’ payments is undetermined.
“The redevelopment agency will have the cash to make the payments identified, but I project that we will have to defer all or most of the currently budgeted capital projects in order to be able to make the payment for the 2011-12 fiscal year,” Avila said in a city email. “The projects funded by the recently issued redevelopment bonds, which include the East F Street project would not be impacted.”
Avila also stated that city staff is currently developing revisions to the redevelopment agency budget for the potential state payment and identifying which capital projects to defer. He will be bringing the recommendation to the Redevelopment Agency Board (City Council) at its July 18 meeting.
Leaders of cities across the state have come out to speak against the latest moves believing the new laws are unconstitutional and violate Proposition 22, which voters passed last November.
That initiative prohibits the state from borrowing or taking funds used for redevelopment, transportation, and other local services. That initiative was seen as a way to prevent California from using local tax dollars to fix the state’s budget problems.
The California Redevelopment Association and the League of California Cities are preparing to file a lawsuit in the next few weeks challenging the bills that would force the agencies to dissolve and join the new program.
The League of California Cities claims that since 1992, California has created its perpetual budget problems by raiding $93 billion in local property taxes, $3 billion in redevelopment funds, and over $1 billion in transportation funds.
In addition, State Senator Lois Wolk, D-Davis, is sponsoring SB 214, a bill that would make it easier for local agencies to use Infrastructure Financing Districts to pay for public works projects.
Oakdale’s best means for reviving downtown and cleaning blight is now in jeopardy with the proposed elimination of its redevelopment agency.
In recent years the city has used redevelopment funds to build the Gene Bianchi Community Center, renovate the First National Bank Building, and remodel Fire Station #1.
Redevelopment agencies were created in 1945 to fight urban blight by subsidizing investment in rundown areas with bonds and paying that money back to cities when property values increase. Critics argue many agencies now use that money to creatively solve other local financial issues.
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