Gov. Jerry Brown’s budget is expected to call for the dismantling of hundreds of redevelopment agencies when it is released today, prompting some local officials to call the plan "reckless” while others seem favorable to the idea.
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The Century 12 San Mateo Downtown Theater is located in one of the city's historic areas. The city opened the 12-screen cinema in 2003, after years of planning and public meetings.
The state faces a nearly $28 billion deficit and Brown’s proposed budget is expected to call for deep program cuts, including consolidation of state departments and agencies and deep cuts to K-12 education if tax extensions fail at the ballot box in June.
In recent years, California has had to borrow and take money away from local cities to keep the state running, including taking billions in RDA money.
There are over 400 RDAs in the state.
Last year, state officials ordered RDAs to redirect a total of $2.05 billion toward state obligations to schools.
On Friday, Dan Carrigg, the legislative director for the League of California Cities met with Brown on the budget prior to today’s release.
"We have major concerns with that proposal,” Carrigg said. "RDA is the key urban development tool, including economic development.”
Carrigg’s hope is that Brown will rely on RDA money in the short term to help trim the state’s deficit but not to dismantle them outright.
The League has challenged the state in court for taking RDA money from local cities in the past two years.
Locally, some cities have millions in RDA money while others have much smaller accounts.
Cities use the money to tackle blight, such as San Mateo did when it funded the downtown cinema project.
Currently, San Mateo has about $13 million in RDA money with much of that committed to building a new fire station and improving downtown by adding parking among other improvements.
The state took more than $4 million from San Mateo’s RDA last year. San Mateo also sent more than $1.6 million of its RDA money in pass-throughs to local schools last year.
Dave Pine, trustee with the San Mateo Union High School District, said all options must be on the table when solving the state’s $28 billion deficit.
"Redevelopment agencies are critical to improving our economy, but so is educating our children. Given the state’s fiscal disaster, all government programs and services will need to live with less until the economy rebounds,” Pine said.
While schools are facing deep cuts once again, Brown’s plan to dismantle RDAs will hurt cities, said San Mateo Councilman John Lee.
"It is absolutely the wrong thing to do,” Lee said. "We need that money desperately. I understand some cities don’t use their RDA money. That is their problem.”
Belmont, for instance only has about $1 million in RDA money, said Mayor Coralin Feierbach, who supports Brown’s plan to dismantle the agencies.
She wonders, though, how Brown can accomplish the plan considering the recent passage of Proposition 22, the Local Taxpayer, Public Safety, and Transportation Protection Act.
Proposition 22 prohibits the state from raiding existing funds allocated to local governments. The League of California Cities spent more than $3 million to help pass Proposition 22 in November.
Feierbach opposes RDAs because it forces the city to keep two separate sets of books.
"We are one body, not two. The agency separates the city into two sections. I’d like to make the city whole again,” Feierbach said.
Redevelopment can cause the wholesale loss of neighborhoods, Feierbach said, and puts restrictions on housing.
"No one can quantify the loss to the regular part of the city,” she said.
But Foster City, which has more than $17 million in RDA funds currently, has plans to support the affordable housing needs in the city by supporting several big developments in the pipeline, including Pilgrim-Triton, a mixed-use development with 700 housing units and 290,000 square feet of office space. It also intends to use RDA money to attract a developer for the vacant 15-acre site adjacent to City Hall, said Steve Toler, Foster City’s finance director.
Foster City plans to spend $10 million in RDA money in the next two years, Toler said.
Taking the money away or dismantling the agency would prevent the city from meeting its affordable housing needs, Toler said.
RDAs typically have housing set-asides, money committed to subsidizing low-income units that, if taken away, could negatively impact hundreds of renters in Foster City, Toler said.
"The subsidies help support lower rents, it could have a big impact on senior housing,” he said.
Foster City Mayor Linda Koelling said Brown’s RDA plan lacks common sense.
RDA money is the job engine for construction jobs, Koelling said.
"This could be a reckless effort by the governor,” Koelling said. "The state has a tremendous mountain to climb. This plan is just another way to undercut local government.”
Her colleague, Councilman Rick Wykoff, agrees.
RDA investment helps cities benefit from increased property values and increased property taxes, Wykoff said.
"I’m not necessarily in favor of using RDA money to build football stadiums but it can meet affordable housing needs,” Wykoff said.
Dismantling RDAs is just one proposal, however, Brown has to trim the deficit, expected to hover at $22 billion for the next five years.
Among Brown’s other expected proposals to trim the deficit are to shut state parks with low attendance, cut state funding to local libraries and to cut all state funding to county fairs, for instance.
Brown is also expected to ask voters in June to extend 2009 increases to sales, vehicle and income taxes, raising $8 billion to $10 billion over the next 18 months.
Bill Silverfarb can be reached by e-mail: firstname.lastname@example.org or by phone: (650) 344-5200 ext. 106.