By CLARK MASON
THE PRESS DEMOCRAT
Redevelopment agencies in Sonoma County stand to lose more than $17 million over the next 12 months as a result of the state budget passed last week, jeopardizing a range of projects from a building a new police station in Cloverdale to park improvements in Santa Rosa.
Gov. Jerry Brown and state lawmakers are counting on $1.7 billion from redevelopment programs to balance the state budget and plan to take $400 million annually in the future.
The money is to be redirected to schools and other local agencies that rely primarily on property tax revenues.
“I think it’s going to be super-disruptive,” said Dave Gouin, Santa Rosa’s director of economic development and housing, who said the specific impacts are yet to be determined, but Santa Rosa stands to lose about $2.6 million of its $8 million redevelopment budget for this fiscal year.
The story is the same for Sonoma County and almost all of its nine cities. Officials describe the budget as a “raid” on redevelopment funds that deprives them of tools to remove blight, spur job creation and build affordable housing.
That argument is reminiscent of the complaints from schools and local governments when the state began allowing redevelopment agencies to divert a share their tax revenues.
County officials say their ability to build or remodel fire stations in the Russian River area will be at risk, along with street and infrastructure improvements in Roseland and Sonoma Valley.
The county is projected to lose $3 million in redevelopment funds this year and $700,000 in payments in future years, said Redevelopment Manager John Haig, assuming the redevelopment programs survive.
“The $3 million will be a fairly significant dent,” he said. “It would cause a fairly significant reduction in what we could do next year.”
The California Redevelopment Association estimates Petaluma will lose $5.2 million; Healdsburg, $2.4 million; Sonoma, $1.8 million; Windsor, $1.1 million; Sebastopol, $713,000; and Cotati, $521,000.
Rohnert Park is not shown as owing any money to the state.
Cloverdale officials said they were still attempting to calculate how much they might lose. But any amount could hinder progress on new projects, including a planned $8 million police station, which appears short of funding now.
The League of California Cities and the California Redevelopment Association are preparing to file a legal challenge with the state Supreme Court in an attempt to stop budget-related legislation signed by Gov. Jerry Brown that eliminates the state’s 398 redevelopment agencies.
But another provision allows the redevelopment agencies to continue in existence if they turn over some future revenue to the state.
“As of today, redevelopment agencies cannot engage in any new activities until and unless they give the word they intend to make these payments,” said Cathy Fairbanks, a spokeswoman for The League of Cities and a coalition in support of redevelopment.
Gov. Brown and critics of redevelopment programs say the money can be better spent in tight economic times, particularly for schools, which would received the $1.7 billion from redevelopment agencies this year.
Redevelopment critics say the system gets abused and there are questionable expenditures, such as allocating $16 million in redevelopment money to a luxury golf course in Palm Desert that was deemed “blighted.”
But defenders of redevelopment say the state strategy is illegal and an attempt to circumvent the intent of last year’s voter-approved Prop. 22, which barred the Legislature from redirecting redevelopment money to balance the state budget.
“That’s why you see this convoluted way of first killing the agencies, but if they volunteer payments (to the state) they can survive,” said John Shirey, head of the California Redevelopment Association.
Redevelopment agencies typically sell bonds to raise money for improvement projects, then repay the debt with a portion of the tax revenue generated as property values rise in the redevelopment area.
Currently, redevelopment agencies collect approximately $5 billion annually.
But Shirey said a significant amount of that money has been committed, such as 20 percent required to be sent to other agencies, including schools. Another 20 percent is set aside for affordable housing programs.
About 44 percent, he said, goes to repayment of debt. He said that only leaves 16 percent of revenues available for new projects.
There have been perennial battles over the state’s attempts to divert redevelopment money. In 2008, The League of California Cities won a decision against the Schwarzenegger administration, claiming it improperly sought to tap redevelopment funds. The next year, a court upheld an attempt by the administration to capture $2 billion of redevelopment money. The case remains under appeal.
“This is the 10th time since 1992 that the Legislature has voted to take money from redevelopment agencies,” Shirey said.
“It’s the same old story,” said Windsor Town Manager Matt Mullan. “They’re taking local money to balance their budget, saying ‘We need the money more than you do.’”
But he said the state diversion threatens Windsor’s ability to fund affordable housing projects along with planned street and infrastructure improvements on Old Redwood Highway.
In Healdsburg, City Manager Marjie Pettus noted the city raised about $13.5 million in redevelopment funds from last year’s bond sale, but has $21 million worth of proposed projects over the next five years.
That includes such earmarks as $2.5 million to refurbish the Memorial Beach Bridge; $2.5 million for sewer and water service south of the bridge; and $2.4 million for improvements to the key, five-way downtown intersection.
Healdsburg, like a number of cities, took technical measures earlier this year to protect its programs, committing to proposed projects or taking title to redevelopment properties.
How effective those measures will be remains unknown.
“We don’t know what opportunities we may or may not have given the prior action we’ve taken,” Pettus said.