Cities all across California are huddling together and convening meetings to ensure the state government does not take away redevelopment agency (RDA) funding. The worry: Gov. Jerry Brown proposed eliminating future RDA funding as a way to chip away at a $25 billion deficit.
With a dark cloud heavily looming across municipalities small and large throughout the state, many cities have taken action in an attempt to protect RDA funds, a monetary source needed for local governments to execute present and future capital improvement projects.
In Santa Monica, RDA funds would be used to finance projects such as the new Pico Library Branch, Civic Center Parks, the Exposition Light Rail line terminus, affordable housing residences, and the Santa Monica High School facilities update, among others. In all, as much as $283 million in RDA funds has been committed to eight projects through 2014 as part of the City’s capital improvement plans.
At the Santa Monica City Council meeting at City Hall on Feb. 22, Council members Bobby Shriver and Bob Holbrook expressed serious concern of how the City would be able to move forward, financially speaking, with many of the projects the elected board approved in the past few months, all of which rely upon RDA funding.
“What happens if the governor wins on the RDA, and we don’t have the money to complete (the Pico Branch Library)?” Shriver asked City Manager Rod Gould during a discussion of the new facility‘s design plans.
Gould painted a grim picture, stating many Council-approved projects could be immediately halted should RDA funding dry up later this year.
“If the governor and legislature vote to take out redevelopment as we know it in California, a great number of projects that have been discussed and planned for many years in Santa Monica will not be built, including (the Pico Branch Library),” Gould stated. “We are taking all steps available to us to try to protect and defend those funds, and no one quite knows how it will work out yet. At this point we would have to consider alternate funding sources, and I don’t know where to begin given the other projects that would also be in jeopardy.”
In general, RDAs are critical to municipalities, as it allows them to take from property tax revenues to fund various projects in a given area. Holbrook inquired about how the timing of when RDA funds arrive influences the financing of such projects.
“We don’t normally come to you with a contract to design and construct a capital improvement project until we have the bonded indebtedness to pay for it,” Gould stated, explaining how redevelopment agencies generates funding from tax increments and City bonds to pay for capital improvement projects. “At this point, when we are engaging consultants and pre-design work … we’re using administrative funds that are also available to us, through redevelopment, to bring these projects to a place where they can be designed and built.”
In pushing RDA funds forward, Shriver pondered whether the council is operating under an assumption to “continue working as though we were going to win on the RDA issue.”
“We are moving forward with the design of a number of projects on the assumption that redevelopment will still be in place and we’ll be able to make good on our commitments,” Gould responded.
Still, both Shriver and Holbrook worried whether funding would be pulled from a project midstream, possibly resulting in unfinished work and incomplete contracts. Gould stated there has been a precedent in other California municipalities where RDA funds were indeed be pulled in the middle of a project, but there is no way to develop a contingency plan just yet without knowing how the state legislature will respond to Brown’s proposed cuts.
“We will be able to meet all of our current contractual obligations. Until the legislation is has been written and voted upon, it’ll be a little bit harder to tell you exactly how future obligations will be treated,” Gould stated.
The looming threat of municipalities not being able to go to the well to get enough water to fund capital improvement projects has city councils up and down the state worried about how it will function without RDA funds.
According to the Bakersfield Californian, the redevelopment agency in Bakersfield allocated last week “all its money for the current fiscal year.” Down in San Diego County, news reports state plans for a new stadiums in downtown San Diego and Escondido to house the NFL’s San Diego Chargers and a minor league baseball franchise, respectively, may be put on hold in light of Brown’s proposal to eliminate RDA funds.
Meanwhile, the City of Temecula reportedly committed nearly $83 million in RDA funds to an affordable house project and the building of a Civic Center complex. Up north in the Bay Area suburb of Walnut Creek, about $5.5 million in redevelopment funds were reportedly committed affordable housing, while San Mateo across the San Francisco Bay allocated $34.2 million, according to reports, from RDA financing to a smorgasbord of local projects.
In his State of the State address on Jan. 31, Brown indicated “current” projects funded by redevelopment agencies would be protected under his proposed budget.
“After serious study of the options left us by a $25 billion deficit, the budget I have proposed is the best I can devise,” Brown stated in his Jan. 31 speech. “A lot has been made of the proposed elimination of redevelopment agencies. I come down on the side of those who believe that core functions of government must be funded first. But be clear, my plan protects current projects and supports all bonded indebtedness of the redevelopment agencies.”