As Hollister officials await word on the future of redevelopment agencies in California, one likely outcome remains clear locally: The city’s own RDA will have relatively few discretionary dollars to spend in the final 12 years of allowed program activity.
That is because the Hollister RDA has about $79 million in anticipated debt to pay off during that time and another decade after, as revealed in its annual report released subsequent to a council meeting Monday.
With the sole revenue source being taxes that currently total about $9.5 million – and plenty of obligations already on the books each year – it will leave the local RDA with about $500,000 to $800,000 to spend toward new projects on an annual basis moving forward, said William Avera, director of the development services department that oversees the RDA.
That future spending level is a far cry from the multimillion-dollar endeavors that have defined the Hollister RDA for the past decade, such as the recent $5 million Fire Station No. 1 reconstruction that looks as though it will be one of the last major projects for the local agency despite another dozen years of allowed activity.
It also means council members and other RDA officials will likely encounter an increasing number of difficult decisions, with the limited dollars, in the years to come. Avera said a planned “Westside Gateway” project – a series of efforts to refurbish the poverty-stricken area of Hollister – would use up a “bulk of” the available infrastructure dollars. That project as a whole is estimated to cost around $3 million, while Avera said the city would move forward in phases – perhaps costing $300,000 to $400,000 at a time – instead of spending all of the money at once.
“The West Gateway is essentially the last great hurrah,” Avera said on Monday.
Part of the reason for the limited discretion ahead is the state requiring that 20 percent of RDA funds funnel into housing projects and another 35 percent go toward other government jurisdictions such as schools and the county.
Plumetting property values have compounded the tighter spending capacity. During the past year alone, total tax increments dropped by nearly 11 percent, according to the RDA report.
All of these mind-wringing figures are being floated in the midst of the statewide debate over the future of RDAs. Gov. Jerry Brown is pushing to largely eliminate them to save more than $1 billion while offering an “opt in” program for agencies that are willing to spend additional dollars on education and other statewide needs. Hollister already has chosen to participate in that alternative program and – barring the California Supreme Court’s decision on the state RDA’s future that is expected by Jan. 14 – would pay a lump sum back to the state of around $4 million along with annual payments nearing $1 million.
Avera explained that under the current scenario, the RDAs would have to halt all activities in 2023 and finish all payments by 2033. Hollister’s RDA has two bonds to pay off that make up the debt, an $8 million issue in 2008 and a $35 million issue in 2003, Avera said.
Those figures largely makes up the $46 million in existing liabilities. The gap between that number and the anticipated debt of $79 million is comprised of required calculations for future, required payments by the RDA.
“We don’t want to issue anymore debt,” Avera said.
One budget-conscious resident, though, was particularly concerned about the RDA debt number prior to Monday’s council meeting.
San Benito County Republican Party Chairman Marvin Jones expressed dismay at the potential that the Supreme Court decision might dissolve RDAs altogether. Avera called such a possibility the “worst-case scenario” but underscored that RDAs would continue collecting a tax increment to pay off bond obligations.
Still, for Jones, the debt figures are a reflection of a larger problem.
“The county sure spends money, and the city, and whoever,” Jones said. “All of our governments do. It’s going to come home to roost one of these days.”
