Redevelopment agency has to give nearly $5 million
The Hollister Redevelopment Agency’s forced transfer of nearly
$5 million to the state is a
”
devastating
”
hit that will likely ground most projects to a halt for a few
years, City Manager Clint Quilter said this week.
Monday, May 10 was the deadline for Hollister and other
California cities with redevelopment agencies to transfer a total
of $2 billion to the state to help with the budget crisis.
Redevelopment agency has to give nearly $5 million
The Hollister Redevelopment Agency’s forced transfer of nearly $5 million to the state is a “devastating” hit that will likely ground most projects to a halt for a few years, City Manager Clint Quilter said this week.
Monday, May 10 was the deadline for Hollister and other California cities with redevelopment agencies to transfer a total of $2 billion to the state to help with the budget crisis.
Hollister had to send more than $4.5 million this week and will owe another $1 million or so next year after a Sacramento County Superior Court judge ruled last week that the state was within its rights to take the local redevelopment funds and transfer the money to school budgets this year and next.
“The immediate impact is that’s money that’s not available to do projects,” Quilter said. “For example, we’ll probably have to scale back the Westside project as well as anything we were going to do downtown when the (Hwy. 25) bypass gets relinquished and the route transfer takes place – providing assistance to economic development projects.”
It is unknown whether the state will seek more money from RDA’s in the coming years, Quilter said, but the impact of this action “basically eliminates anything for at least the next three, four or five years” other than the $5 million reconstruction of the downtown fire station and $3 million in planned improvements to the west-side gateway to town. Both projects are being funded through a $20 million bond issuance.
Housing-assistance projects funded by the RDA will continue, Quilter said, because that money was not included in the state transfer.
The California Redevelopment Association (CRA) immediately appealed the court ruling while encouraging that RDAs make the required payment as the appeal moves forward.
“Taking this funding will stall job creation efforts in California at the worst possible time,” said John Shirey, executive director of the CRA. “The money being turned over to fund state obligations would have been used for local revitalization projects that would have improved our communities, created jobs and stimulated our local economy.”
Quilter agreed, saying the state is “taking money that communities can use for economic development and to spur job growth and they’re using it essentially to pay off debts they’ve already spent money on.”
Redevelopment money is generated by property taxes on new development in areas that are deemed to be blighted. When redevelopment agencies improve deteriorated areas, property values – and property tax revenues – within those areas increase.
The resulting “tax increment” money is used by redevelopment agencies to make investments within designated areas.
Other area redevelopment agencies are feeling the hit from the transfer of money to the state. Salinas, which has two redevelopment areas, expects to lose $2.2 million this year and next, while Seaside will have to pay $4 million and Marina $600,000. The city of Monterey will lose $2.2 million in redevelopment funds.
