Council Mulls the $4 Million Redevelopment Question

The City Council has turned its attention to the battle over redevelopment, a little more than two months before members have to decide if the city should pay $4 million to the state. 

Cities will have to fork over varying amounts by Oct. 1 to form new redevelopment agencies, after a June budget compromise prevented them from being eliminated altogether.

Critics describe the requirement as a ransom designed so that the cash-strapped state can balance the budget with funds from local agencies.

City Manager Blair King told the council this week that the situation is “dynamic, fluid and complicated” since a redevelopment compromise was introduced and voted on in one day at the end of a long budget battle.

When Councilwoman Barbara Denny asked if there was a way to create a chart to better explain the situation to the public, King said no.

“It would look like an electrical grid for the space shuttle,” he said.

For Coronado, the crux of the issue is the loss of $40 million the city loaned its redevelopment agency, said Rachel Hurst, the director. The money was used for schools and Sharp Coronado Hospital.

That money could not be recouped if the city elects not to preserve its redevelopment programs by withholding the $4 million from the state. Councilwoman Carrie Downey noted that spending that amount to get $40 million back is not a bad deal.

“At the time we needed new schools. Now we have them," Downey  said of the loan. "It was a smart way to get construction done.”

There are a few redevelopment projects, such as a new senior center, that the council would like to see built. Without a successor redevelopment agency, it would have to find other revenues to do so.

In addition to the $4 million that could be paid this year, maintaining redevelopment would cost up to $900,000 annually in later years, King estimated.

The council will not vote on the matter until Sept. 2. A full staff report will be presented next month.

Other cities and agencies are rushing to action. The League of California Cities, the California Redevelopment Association and the cities of San Jose and Union City on Monday petitioned the California Supreme Court to declare the state's redevelopment plan  unconstitutional. 

San Diego already has decided to make the state payment—$70 million, reflecting the city's more active redevelopment slate—to retain its program.