Council Buys Time on Redevelopment Agency Quandary

Faced with the hard choice imposed by the state budget plan of either dismantling its Redevelopment Agency or paying a premium to maintain it, the El Cerrito City Council Monday night unanimously approved measures designed to keep both options open for at least another month.

The five-member council followed city staff recommendations to appoint the city as a successor agency to the Redevelopment Agency in case the council votes later to let the agency fold. If the city had not named itself the successor, an outside authority or authorities could have taken over and exercised responsibility for disposing of the agency's assets and settling its obligations.

At the same time, the council also adopted an Enforceable Obligations Payment Schedule that will allow the city to continue to make necessary payments as a Redevelopment Agency.

City staff also , though the council does not vote on that choice until its Sept. 19 meeting, with a second reading on such an "opt-in" measure on Oct. 9.

The state's nearly 400 local redevelopment agencies are authorized to receive a portion of property taxes to assist in revitalization of blighted areas. Housing and infrastructure are common redevelopment projects though other activities — like assisting the rebirth of Cerrito Theater — can be redevelopment initiatives. In El Cerrito, the San Pablo Avenue corridor is the city's main redevelopment zone.

Under the state formula for keeping its Redevelopment Agency, El Cerrito would have to pay $1.84 million this year and nearly half a million dollars annually in subsequent years, according to the city staff report. However, cities can lodge an appeal of the amount to be paid, which El Cerrito has done, citing increased obligations and lower property tax revenues caused by shrinking property values, Redevelopment Manager Lori Treviño told the council.

The outcome is darkly clouded by a court challenge to the state budget plan now pending before the state Supreme Court. The plan approved by the state legislature and the governor included two laws affecting redevelopment agencies. One, AB 1x 26, shuts down redevelopment agencies, but the other AB 1x 27, allows them to continue, with somewhat more restricted powers, if they pay what several cities have termed a "ransom payment."

The California Redevelopment Association, the League of California Cities and other plaintiffs sued, seeking to declare the state action on redevelopment agencies unconstitutional. The state Supreme Court Thursday agreed to hear the suit and issued a partial freeze on further action in a ruling that "has caused a lot of confusion," attorney Karen Tiedemann, special counsel to the city, told the council.

"Our best advice is that you are suspended," she told the council members, who were meeting under both of their official hats as the City Council and the Redevelopment Agency directors.

The state high court has set an "aggressive" schedule for resolving the issue, requiring all briefs to be filed by the end of September and setting a goal of issuing a decision by Jan. 15, Tiedermann said.

Councilman Bill Jones expressed frustration over the choices facing the council. "We must choose the best of the worst for the community," he said. "...I'm leaning toward paying the extortion fee and hope that the court overturns the legislation."

The councilmembers also followed a further staff recommendation to give the staff direction on preparing documents to retain the agency. At least two councilmembers, Greg Lyman and Janet Abelson, urged staff to be prepared for the other choice of dissolving the agency.

"I encourage staff to do everything, making sure we're covered no matter what," Abelson said.

According to staff estimates, shutting down the Redevelopment Ageny would cost the city more than $24 million by fiscal year 2024-25, Treviño told the council.

Planned projects at stake in the decision include a new senior center, library and police station, along with transit-oriented development on several city-owned parcels along San Pablo Avenue — not to mention the threat of being forced to sell the Cerrito Theater building.

At the beginning of the year, the city transferred control of city-owned, non-affordable-housing properties to its Municipal Services Corp. in an attempt to avoid being forced to dispose of them — a strategy other agencies also followed that the state could seek to negate.

The council had been scheduled to consider a proposed ordinance on keeping backyard farm animals Monday night, but that issue was postponed because of the urgency of dealing the Redevelopment Agency question.