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Brown's push to defund redevelopment agencies may hurt local projects

Roseville's redevelopment agency has focused on projects downtown
By: Sena Christian, The Press Tribune
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The City of Roseville, like most municipalities, is not taking a sit-and-wait approach to Gov. Jerry Brown’s recent proposal to eliminate redevelopment agencies. Elected in November, Brown has suggested several tactics to close a $25.4 billion budget gap. He wants to divert $1.7 billion in tax revenues a year designated for redevelopment agencies to basic services, including education and public safety. The governor’s proposal puts future redevelopment projects in Roseville at risk. More than 400 redevelopment agencies exist around California. Brown’s proposal would move the property tax increments they currently receive to other government coffers starting July 1. Roseville City Council unanimously voted Jan. 19 in favor of Mayor Pauline Roccucci signing a letter authored by the League of California Cities to contest the proposal. The league announced Friday that cities may sue Brown, calling the proposed action an illegal money grab. Meanwhile, the Roseville Redevelopment Agency is taking a hard look at its finances to identify the amount of tax increment needed to repay its expenditures for completed and current projects, as well as outstanding loans, said Kevin Payne, Roseville’s assistant planning and redevelopment director. Brown’s proposal says agencies would receive ongoing funds for these “legally obligated contracts.” The state estimates that $5 billion is available in tax increments, a portion of which would pay off debt obligations. Cities would need to form a successor entity to monitor and fulfill debts should agencies dissolve. “This is creating much uncertainty for agencies throughout the state, as they contend with what is and isn’t legally obligated,” said Administrative Analyst Mark Wolinski, during the council meeting. The Roseville Redevelopment Agency currently has $12 million in unexpended, but reserved, bond funds. Some of this money is intended for three mixed-use projects downtown, including 6,000-square-feet of new commercial space and 200 new affordable housing units. Critics of Brown’s plan say defunding redevelopment agencies means the demise of a major economic tool. Payne said that every $1 spent by an agency generates $14 in the local economy. So that $12 million equates to a $168 million potential loss to the local economy. That would also mean the loss of 150 jobs, mainly in construction, which has been one of the hardest-hit sectors in terms of unemployment in California. Throughout the state, redevelopment agencies bring in $2 billion in taxes annually and provide 300,000 jobs, according to the League of California Cities. Redevelopment contributes more than $40 billion to the state’s economy in the generation of goods and services. The organization calls redevelopment “the state’s biggest job creation program.” “So there will be significant impact on existing tax revenue and a further impact on unemployment,” Payne said, adding that it’s too early to tell what would happen to the four full-time employees who staff Roseville’s agency. This isn’t the first time the state has turned to redevelopment funds to help balance its budget. In 2010, local agencies had to come up with $1.7 billion to hand over to the state, including the $2.3 million Roseville paid. That amount would have almost funded the entire construction of a new town square downtown. In November, voters passed Proposition 22 to stop state budget raids of local government funds. “There’s some level of frustration,” Payne said. “This is the third year (in a row) the state is trying to balance its budget on the backs of redevelopment.” Over the past decade, the city has invested $13 million into Historic Old Town streetscape and infrastructure improvements, $9.2 million into building a free parking garage and $4.2 million into a Vernon Street streetscape-improvement project. The city renovated the historic Tower Theater for $1 million and invested $111,000 into the Blue Line Gallery. In March, the redevelopment agency completed a $10 million renovation of a stretch of Riverside Avenue. The city has awarded $1.2 million in commercial loans. Overall, the city has invested $80.5 million to improve downtown. Regardless of what happens with Brown’s proposal, Roseville has a back-up plan with its Community Development Corporation, which the council formed in November to implement the city’s revitalization goals through private-public partnerships. “The very good news is that we have a Community Development Corporation in place,” said city spokeswoman Megan MacPherson. “That puts us in a stronger position to ensure redevelopment remains viable in Roseville and also demonstrates great foresight on the council’s part.” Sena Christian can be reached at senac@goldcountrymedia.com.