The future of redevelopment remains hazy, but the City of Turlock is attempting to plan for whatever fate may befall redevelopment agencies statewide.
The Turlock City Council held a special workshop Tuesday specifically to discuss the city’s options following the state’s action to force all redevelopment agencies to either close their doors, or pay large fees to the state.
“I think it’s just a wait and see for me right now,” said Turlock Councilwoman Mary Jackson.
Beyond the basics of the plan, the details remain up in the air, with Turlock challenging the state’s payment calculation and the state plan facing Supreme Court review.
The state calculates Turlock’s share at $3.2 million this year – nearly double Turlock’s estimate of a $1.6 million payment. Turlock has appealed the payment to the Department of Finance, and had anticipated a response by Sept. 15 which has not arrived. Should the state decline to adjust the payment, Turlock would not be able to afford to keep the agency open.
In exchange for its $1.6 million payment, Turlock would only receive about $1.3 million in return this year. But Turlock would be able to keep its agency active, and potentially collect more RDA revenue in future years.
"We do still have blight,” said Turlock Redevelopment Manager Heidi McNally-Dial. “We do still have housing projects to do.”
The legislation currently calls for Turlock to pay a further approximately $400,000 each year so long as its RDA remains intact, leaving about $900,000 in annual revenues. But the state, unlikely to collect the $1.7 billion budgeted from its RDA closure plan, may up the costs of future payments, forcing Turlock to reconsider its RDA in future years.
“The reality is this is a one year decision,” City Manager Roy Wasden said. “If the state can take the money, I think we'll have to look on a year-to-year basis on how much the state is going to take.”
Should Turlock shutter its RDA, the city would lose its main source of project funding – and be left with a $500,000 budget gap in administrative, fixed, and employee costs in Turlock currently funded by the RDA. The expenditure totals all or part of seven positions, plus a portion of administrative funding for six departments.
“The big question I've been asked is, what about our current projects?” said Turlock Housing Manager Maryn Pitt.
The planned Avena Bella housing project on Linwood Avenue would continue, as the first phase of 80 units was funded by the RDA prior to its closure. The second phase, of 60 units, may never occur, however, has the agency is not projected to accumulate enough to finance that development for four to six years.
Additionally, the City Council would no longer guide the agency, which would be replaced by a “successor agency” intended solely to wind down the RDA. The loss of control would leave Turlock in a potentially precarious position.
The future of other services funded by RDA – code enforcement, graffiti abatement, and development of the city’s industrial park – remains uncertain, should the agency close.
The state’s move to shutter redevelopment agencies statewide could yet be overturned by the California Supreme Court.
The court has agreed to hear a case challenging the constitutionality of eliminating such agencies, on the basis of 2010’s Prop 22. That proposition was intended to prevent some “seizing, diverting, shifting, borrowing, transferring, suspending, or otherwise taking or interfering with” revenue dedicated to local government.
Until the court makes its decision, some elements of the law have been stayed, creating a difficult situation where cities must prepare for the law even as the law may be overturned.
“This legislation is ambiguous and inconsistent in many respects,” said Turlock RDA legal counsel Bill Strausz. “The difficulty in dealing with it is has been compounded by this stay.”
A final Supreme Court ruling on the plan to close RDAs is expected before Jan. 15, 2012. Until then, the future of redevelopment agencies remains uncertain.
“We’ll have to wait and see,” Strausz said.
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