Officials face tough decisions on Contra Costa projects
By Lisa Vorderbrueggen
"If the county dumps its redevelopment agency, an independent oversight committee likely would sell the land to pay off the loans, county redevelopment staff members said."
"Catherine Kutsuris, the county's chief planner, and redevelopment director Steve Goetz recommend keeping the agency."
"If the law (SHUTTING DOWN RA'S) survives the pending legal challenge, the county would have to make a one-time $5.3 million payment next year."
8/23/2011
Contra Costa can afford to keep its redevelopment agency alive, even after it forks over to the state a mandatory $5 million fee some characterize as ransom.
Some of the affordable housing, transit village and other projects in the county's five redevelopment regions -- Bay Point, North Richmond, the Contra Costa Centre transit village near the Pleasant Hill BART station, Rodeo and Montalvin Manor -- will be delayed or canceled because of the fee, the county staff has advised.
Money for deputies in North Richmond and the Contra Costa Centre, for example, and $1.75 million for a vaguely defined civic facility at the transit village could be diverted to pay the fee.
Contra Costa is among dozens of cities and counties evaluating whether to retain or jettison their redevelopment operations after the Legislature's budget seized a portion of the tax dollars used to fund the agencies. A consultant came up with the feasibility suggestion.
The California Supreme Court earlier this month muddied the issue when it suspended the state redevelopment overhaul. The court is scheduled to make a decision by early January.
If the law survives the pending legal challenge, the county would have to make a one-time $5.3 million payment next year.
That amounts to a third of the tax dollars the redevelopment agency estimates it will collect in 2012. It will have to pay the state $1.25 million a year thereafter.
East Bay redevelopment agencies that have voted or intend to vote to stay in business include Alameda County, Richmond, Fremont, Walnut Creek, Oakland, Hayward, Antioch, Oakley, Brentwood and Pleasant Hill. Concord, Clayton, San Ramon and Lafayette are mulling options.
Catherine Kutsuris, the county's chief planner, and redevelopment director Steve Goetz recommend keeping the agency.
They say the program has led to the construction of hundreds of affordable homes and spurred economic investment that never would have been made without government intervention.
For the politicians, the decision pits struggling core government services such as fire protection and schools against economic development interests.
That's because redevelopment agencies take off the top the "tax-increment" dollars, the additional property taxes redevelopment projects bring in. The premise is that the agency's economic development activities drive up property values and generate new revenue, although some studies show this effect has been overstated.
If redevelopment districts went away, all the money would flow to the public services that share property taxes: local schools, fire, sewer and park districts, and the county.
Dismantling Contra Costa's redevelopment agency would redirect $60 million to $87 million of tax-increment money over the next 25 years directly to the county and other local agencies, according to consultants the county hired to study the issue.
It is a relatively small amount of money, however. Contra Costa's general fund, for example, would collect an additional $21 million, or less than 2 percent of a single year of the county budget.
With nearly every public agency under painful financial pressure, redevelopment critics have ample sympathy for dissolution.
Fire districts have been particularly vocal. Three Contra Costa County fire agencies have cut service, and each likely will ask voters to approve new fire taxes next year.
No matter what the county decides, its Bay Point redevelopment plan is in peril.
The agency has borrowed millions of dollars to buy land near the Pittsburg-Bay Point BART station in anticipation of selling it to a developer who would build several hundred apartments or condos and shops.
However, property values in Bay Point have declined 55.3 percent since 2008. Barring an unlikely swift economic recovery, the district in two years will be unable to make its $2 million annual payment on its loans.
If the county dumps its redevelopment agency, an independent oversight committee likely would sell the land to pay off the loans, county redevelopment staff members said.
If the county stays in the redevelopment business, the staff members suggested the reconstituted agency could merge the five districts into a single pot of money and draw from tax-increment dollars generated outside Bay Point.
That money likely would come from taxes paid by landowners in the Contra Costa Centre, the only district where property values have risen in the past four years.
It would be controversial.
Redevelopment is often pitched as a means to return tax dollars to the communities that paid them. Spreading the money beyond the borders of the original districts may raise objections.
Jim Hunt, a redevelopment critic and Contra Costa Centre Municipal Advisory Board member who also is president of an adjacent homeowners association, is dubious.
"With the payments that have to go to the state and the other districts not increasing in revenue, what makes us (taxpayers in the Contra Costa Centre) think we will get anything out of continuing it?" he asked.
Contact Lisa Vorderbrueggen at 925-945-4773 or IBAbuzz.com/politics. Follow her at Twitter.com/lvorderbrueggen.