Saturday, July 16, 2011

Redding Record: Redevelopment plan costly for Redding, Shasta Lake

Redevelopment plan will be costly to Redding, Shasta Lake

By Sean Longoria, Scott Mobley
Posted July 15, 2011 at 11:57 p.m

Redding and Shasta Lake likely will wind up forking over the hefty sums California demands as the price for doing redevelopment in an era of balanced state budgets.

The Redding City Council on Monday will consider making those payments so it may resume work on plans to buy the Costco store for a new police station, among other projects.

The city would pay an estimated $5.9 million this fiscal year to restart redevelopment and about $1.4 million each fiscal year thereafter to keep it going. The agency expects $17.4 million in tax and other revenue this fiscal year and $15.6 million next year, budget documents show.

Gov. Jerry Brown suspended redevelopment statewide June 30 when he signed legislation dissolving all redevelopment agencies to plug a $9.6 billion budget gap.

Companion legislation allows agencies to resume selling bonds and doing deals with developers and nonprofit organizations if they agree to the "opt in" payments for schools, special districts and public safety.

All told, the legislation directs $1.7 billion statewide in property tax revenue from redevelopment to local government once funded by the state.

The California Redevelopment Association and the League of California Cities have vowed to file suit to stop the legislation, which they have called an unconstitutional state raid on local government dollars.

Meanwhile, the Redding Council could formally "opt in" to redevelopment as early as Aug. 2, allowing the agency to start doing business again by late September, according to a council report.

The deadline for payment to the state would not arrive until Jan. 15, according to the report.

Redding could tap its affordable housing dollars for the initial $5.9 million payment.

The agency has roughly $4 million dedicated to building or remodeling homes and apartments for households earning incomes below the local median, budget documents show.

City officials were close to approving a deal with Costco to buy its Dana Drive store. But they did not finish by the June 30 deadline.

Redding has earmarked $4.45 million in redevelopment dollars for that purchase. But the agency cannot touch that money until it first agrees to hand over $5.9 million to the state.

Under the deal, the city would lease the store back to Costco until the warehouse retailer moves to another spot in town, most likely on Oasis Road just east of Interstate 5, where developer Don Levenson has approval to build a shopping center.

The city would also deed-restrict the Dana Drive store so no big-box rival could move in for at least a decade.

Redding officials have spent the past three years considering options for a new police station to replace the aging, leaking and once crowded California Street headquarters.

A council majority has rejected building from scratch in favor of a less expensive retrofit. But the city has identified no money for retrofitting the Costco store should it go ahead with the purchase.

Meanwhile, budget cuts have driven the police force from 119 sworn officers in 2008 to 98 today — a 25 percent reduction.

The city has no immediate plans to rehire any of those laid-off or eliminated officers, as rising pension and insurance costs continue outstripping flat general fund revenues.

Shasta Lake also will consider paying to resume redevelopment.

The Shasta Lake council will decide Tuesday whether to "opt in," putting the city on the hook for $1.1 million this fiscal year and roughly $270,000 to $280,000 each following fiscal year, according to a council report.
Shasta Lake would wipe out its redevelopment reserves and dip into its low-income housing fund to meet the first payment and each year after that the payment would be covered by tax revenue, according to the report.

That would leave the city some money for future projects. Assistant City Manager John Duckett said Friday the city wants to use about $1 million per year in redevelopment funding to continue street improvements and repairs for the next few years.

The City Council, as Shasta Lake's redevelopment board, approved and signed contracts on a pair of projects only weeks before Brown signed the legislation. That secured $2.2 million for roadway improvements and the construction of a parking lot at Grand River Avenue and Shasta Dam Boulevard.

But Shasta Lake still hopes the California Redevelopment Association's challenge to Brown's elimination of redevelopment succeeds. The city in March approved a $200 contribution to that legal fund.

IF YOU GO

What: Redding City Council meeting.
When: Monday, 5:15 p.m.
Where: Council chambers, 777 Cypress Ave.
Agenda includes: Payment to state to resume redevelopment.

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