Riverside Press-Enterprise: Redevelopment Agencies Continue State Fight

Redevelopment agencies fighting state repayment efforts

10:15 PM PDT on Thursday, June 23, 2011

By DUG BEGLEY  The Riverside Press-Enterprise

California's budget stalemate has left redevelopment agencies statewide unsure of their future, as local officials figure out how to keep projects going and vigorously defend the program.
Redevelopment agencies -- county and city offices charged with taking blighted properties and returning them to vibrant commercial and residential uses -- would each pay their share of $1.7 billion state lawmakers are seeking, if they want to survive.

Inland agencies would be responsible for paying about $360 million if they wanted to remain active, according to the estimates. But the payments would halt affordable housing projects, redevelopment officials in Riverside County said.

"The impacts of redevelopment and the cutbacks in funding are drastic," said Riverside Mayor Ron Loveridge. "As we recover from this recession, it makes no sense to take away the best tool cities have."

The bills have not been sent to Brown for his signature, so redevelopment agencies are making last-ditch efforts at blocking them. If that fails, redevelopment supporters said Tuesday they will sue the state.

"We'll be prepared to go to court within a few days," John Shirey, executive director of the California Redevelopment Association, said during a statewide videoconference.

Redevelopment supporters say the programs have built libraries and parks and created thousands of jobs in many cities. Redevelopment allows local officials to spur development by offering incentives such as building roads to make office and industrial parks more appealing, or helping finance construction of apartments that meet the criteria for affordable housing.

"We believe the record is clear that there is value," said Tom Freeman, spokesman for the Riverside County Economic Development Agency, of which the county redevelopment office is a section.

But critics say redevelopment is a way for cities to basically bankroll commercial and residential developers. Controller John Chiang, in a review of 18 redevelopment agencies including Riverside County, Palm Desert and Desert Hot Springs, found Palm Desert used redevelopment money aimed at curbing blight at a luxury golf resort. San Jose's redevelopment agency was paying portions of city salaries with the funds, according to Chiang's report.

In Moreno Valley, officials recently spent $800,000 on a new sign for the city's auto mall. The investment was defended as a way to boost car and truck sales in the city -- thereby increasing the sales tax base.

Loveridge, a vocal supporter of redevelopment, said the implication that redevelopment pays for things developers would fund anyway is "absolute, categorical nonsense."

Without redevelopment agency support, Loveridge said rundown buildings along University Avenue between downtown and UC Riverside never would have been converted to nicer commercial and residential developments.

"Newer cities might be able to deal with it, but older, aging cities have a definite need for redevelopment," Loveridge said.

Future uncertain

Under the plan laid out by the two bills awaiting Brown's signature, redevelopment agencies that want to continue will pay their share of the $1.7 billion to bolster school funding. The amount would be based on each redevelopment agency's share of the taxes collected.

In Riverside and San Bernardino counties, where the programs are heavily used, 51 redevelopment agencies would pay nearly $360 million. Fontana, Riverside County and Rancho Cucamonga each would pay more than $27 million, according to the California Redevelopment Association.

A final tally of the payment will be completed by the state finance department, when and if the bills take effect.

Making that payment to the state will end affordable housing programs in Riverside County for one year, Freeman said. Officials simply would not have the money on hand to approve loans and agreements.

Cities also would cut back on housing. Riverside officials said they would reduce spending on affordable housing by 80 percent, making it more difficult to compete for federal housing grants that require local matching funds.

But the bulk of spending by most Inland redevelopment agencies will continue, aimed mostly at developing commercial and business uses. Those projects are often paid for with long-term bonds, repaid by the agency with future collections, Freeman said.

Affordable housing, though a part of redevelopment, is a fraction of how most agencies spend their money. Riverside's rehabilitation of University Avenue and other areas has been a $247 million investment over the past decade. During the same time, the city spent $37 million on affordable housing.

Not all of the agencies are planning for dire consequences. San Bernardino County's redevelopment agency stands to lose far less money than Riverside County under proposed legislation, county spokesman David Wert said. The one-time hit amounts to about $5 million immediately and $1.5 million a year.

"There isn't anything right now that will have to be stalled, stopped or planned that will have to be undone," Wert said.

San Bernardino County's largest redevelopment zone is a 3,500-acre area around the Auto Club Speedway near Fontana where it has made infrastructure improvements to support industrial and warehouse development.

Reporter Imran Ghori contributed to this story.

Sacramento lawmakers are looking to reign in redevelopment agencies, or abolish them as Gov. Jerry Brown proposed earlier this year to balance the state's budget.

Photo by David Bauman/The Press-Enterprise

Critics of redevelopment say taxpayer money bankrolls projects that developers would pay for themselves if forced to. Riverside Mayor Ron Loveridge called the criticism ‘nonsense.’

The state Legislature passed two bills last week. 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.