Redevelopment Agency Juggling Act Back to Council Tonight

El Cerrito City Councilmembers will don their hats as board members of the El Cerrito Redevelopment Agency tonight, Monday, to consider a non-binding commitment to save the city's Redevelopmet Agency by paying the state extra funds.

The city is navigating shaky bureaucratic and legal terrain in its efforts to retain the option of keeping the agency.

Two parts of the state budget package that took effect at the end of June threw local redevelopment agencies across the state, including El Cerrito's, into a quandry and then into a legal quagmire.

One measure, AB 1x26, dissolved redevelopment agencies as a cost-cutting measure in the face of the state budget gap, but another measure, AB 1x27, offered cities the option of continuing their redevelopment agencies if they make opt-in payments to the state.

A lawsuit against the measures — filed by the California Redevelopment Association, League of California Cities and others — was accepted by the state Supreme Court, which put the brakes on the process until it can issue a ruling, which is expected in January.

What Redevelopment Agencies Do

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 about $1.85 million this fiscal year and $400,000 annually in subsequent years, according to the city staff report. The amount could be lowered if the city succeeds in an appeal to the state citing increased obligations and lower property tax revenues caused by shrinking property values.

City Intends To Be Reimbursed

Under the measures recommended by staff for council/agency action tonight, the remittances that the city would pay the state to keep the Redevelopment Agency would be reimbursed by the agency to the city from the agency's annual tax increment — assuming the Supreme Court upholds the state actions on redevelopment agencies.

The proposed resolution states, "The City does not intend, by passage of this Resolution, to pledge any of its general fund revenues or other assets to make the Remittance Payments, it being understood by the City Council that any Remittance Payments will be funded solely from the Agency Transfer Payments and/or other assets transferred to the City in accordance with the Voluntary Program Act (the opt-in option)."

In earlier action last month, the council/agency also 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 or is forced to see it dissolved. 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.

City Criticizes State Actions

The resolution also condemns the state actions on redevelopment agencies as "misguided and illegal":

"The City Council does not endorse the Redevelopment Restructuring Acts and is taking actions required by those Acts in protest. The Acts constitute another misguided and illegal State budget raid of local government funds that voters have repeatedly sought to end, most recently in November 2010 when an overwhelming 61 percent of voters supported Proposition 22, electing to stop State raids of local government funds, including redevelopment funds, which are generated and intended to be spent locally. The Acts will destroy economic development, affordable housing, and revitalization efforts in El Cerrito."