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High Cost Of Retaining City Redevelopment

POSTED August 31, 2011 2:58 a.m.

Oakdale City Council passed an ordinance at their mid-August meeting that will save the city’s redevelopment agency, but at a cost of approximately $829,162 in the first year of participation.
The decision to opt in to the Alternative Redevelopment Agency Program is the only way for Oakdale to keep and operate an RDA. Earlier this year a trailer bill to the California State Budget was passed that will dissolve redevelopment agencies across the state and keep RDA funds at a state level. A second piece of legislation allowed cities to keep their redevelopment agencies and funding if they paid a portion of their RDA funds to the state.
“I think it’s important to note that the decision the council made was a mandatory decision, if they wanted to keep a functioning RDA,” said Interim Oakdale City Manager Gregory Wellman.
Oakdale Mayor Pat Paul said that most of the discussion regarding the urgency ordinance was “bashing” the state for putting Oakdale in a position of choosing to lose their RDA or pay a significant portion of RDA funding to keep the agency.
“We felt like we were being held hostage,” Paul said.
Wellman said that the State’s decision to take money from redevelopment agencies is a sign that they are not dealing with their own budgetary issues. He said that RDA funds, which are used to improve blight conditions in a specified part of town, are connected with other city funding. Wellman said that RDA funds are used to improve an area of town, which in turn can draw more businesses to the area and increase property value. Improvement leads to more tax dollars, which go to many city services including police and fire.
If the council had decided not to opt in to the alternative plan, the Oakdale RDA would have been dissolved under ABX1 26. This would have had an immediate impact on Oakdale finances, and would have prevented future RDA projects.
“RDA has done a lot of excellent projects in Oakdale,” said Albert Avila, finance director for the City of Oakdale.
Avila said that Oakdale RDA resources have been used to build the Oakdale Gene Bianchi Community Center and Public Plaza, Gladys Lemmons Senior Community Center, and a number of improvements to facades, buildings, parking areas and numerous other projects.
“If we had not had the RDA none of these projects would have been done,” Avila said.
In addition, dissolution of the RDA would immediately release the agency from all debt. However, most of Oakdale’s Redevelopment Agency funds are borrowed from the City of Oakdale. The RDA currently owes $106,739 to the city, and an additional $1,497,089 to the Capital Facilities Funds, which Avila said is a city account. These funds would not be recovered by the City of Oakdale if the RDA were dissolved.
“That was part of what we’re trying to prevent,” Avila said.
If the agency were to dissolve, it is not yet clear what would happen to real estate owned by the RDA. Avila said that the RDA preemptively transferred much of its real estate property to the City of Oakdale, but a few parcels were not transferred.
“We aren’t sure what could have happened to those parcels,” Avila said.
The Oakdale Redevelopment Agency is also responsible for several low-income housing projects, including Oak Haven Senior Apartments. If the agency were dissolved the city would no longer have the funding or authority to act as a housing agency, and all current RDA housing property and management would pass to the local housing authority.
Oakdale City Council voted 5-0 to opt in to the Alternative RDA program to avoid losing the Oakdale Redevelopment Agency. Participating in the program means that Oakdale can keep a redevelopment agency, collect RDA funds and continue with future RDA projects. The first year of participation Oakdale Redevelopment Agency will have to pay $829,162 in two payments, the first due Jan. 15, 2012. Every year after, Oakdale will pay $196,000 base payment. The State could increase that annual payment through future legislation. The resolution passed by the council included a list of RDA projects scheduled for the next year that would be postponed in order to pay the state.
“We just held our noses and voted for it,” Mayor Paul said.
Redevelopment agencies were set to dissolve on Oct. 1 under ABX1 26. However, the California Supreme Court has suspended the process because of a lawsuit filed by the California Redevelopment Association. The court is expected to make a decision by January 2012. 
“If the court decides to overturn it then this all goes away. We just didn’t want to risk it,” Avila said.

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