Consultant will help council decide future of agency
The City of Hollister will pay a consultant up to $5,000 to help
the city council decide whether to dissolve or continue the
redevelopment agency, whose programs are in jeopardy after the
recently passed state budget effectively eliminates RDAs.
Consultant will help council decide future of agency
The City of Hollister will pay a consultant up to $5,000 to help the city council decide whether to dissolve or continue the redevelopment agency, whose programs are in jeopardy after the recently passed state budget effectively eliminates RDAs.
The report is expected back by the second week of August, when the council plans to hold a study session on the future of redevelopment. By Oct. 1, cities around the state need to decide whether to dissolve RDAs and create a successor agency – likely the city itself – or opt into a “voluntary” payment program that would transfer tax revenue to the state each year.
If Hollister chooses the latter option, Development Services Director William Avera said the RDA would have to send the state more than $4 million during the first year.
Asked about whether he expects Hollister’s redevelopment agency to live on, Avera said, “Last week, I was thinking there was going to be no way in heck we were going to be able to do this. This week, I think it’s a stretch, honestly, but it’s probably something that we might be able to pull off if that’s the direction the council wants to go. A lot hinges on whether we can get an appeal from the state reducing the amount of that first year’s payment.”
Ongoing payments beyond that first year are expected to be $940,000 annually.
“The critical thing is to project what our revenues will be in the future,” Avera said. “Our revenues have dropped substantially in recent years because of property values dropping. That’s not helping our situation.”
Redevelopment agencies are suspended from initiating contracts, projects and programs until either the state’s actions are ruled unconstitutional or local jurisdictions agree to participate in the alternative redevelopment program, according to Rosenow Bpevacek Group Inc. of Santa Ana, the firm that will conduct the RDA dissolution analysis for the city.
The report will analyze what the RDA owes, what its assets are, estimate future tax increment revenues that may be available to the agency, and develop a list of pros and cons of continuing the agency.
In anticipation of the dissolution of redevelopment agencies, cities around California scrambled before the state budget was passed to transfer RDA-owned properties to the cities in which they operate, thus protecting them from being sold and the money sent to the state.
The Hollister RDA took this route with the downtown fire station on Fifth Street – which is being rebuilt using bonds issued by the RDA – as well as the grassy plot on the 400 block of Fourth Street at the corner of San Benito Street and the former Leatherback Industries parcels on McCray Street and Prospect Avenue.
If the RDA is dissolved, the city would become its successor agency, meaning it would collect tax revenue for the debt owed on bond payments and housing projects.
“There will be no new projects, affordable housing, public infrastructure or facilities built” under that scenario, Avera said. “Everything ceases.”
The governor’s office is telling cities that they will still receive some of the tax revenue that formerly went to redevelopment agencies, but local officials say there are no clear estimates about how much money would actually make it to Hollister’s general fund.
Avera said Hollister and other cities throughout the state have to decide whether to vote to continue their redevelopment agencies as they await the outcome of lawsuits aimed to stop their dissolution or to vote to eliminate the agencies and then risk having to go through an arduous process to re-start the agency if the lawsuits are successful.
“We could adopt a continuation ordinance, pay the $4 million, and if we’re successful in the lawsuits I’d assume we’d get the money back from the state,” Avera said. “But who knows how quickly that happens and what the ultimate decision is going to be. Just based on the simple facts, I really believe the governor and the state screwed this deal up. It just seems it’s pretty cut and dry the state is violating the constitution and Prop. 22,” a voter-approved measure that prevents the state from taking money allocated to local government, public safety, and transportation.
If the Hollister RDA is eliminated, so too would be its support of various local agencies. The RDA gives the Section 8 Housing Authority program and the Hollister Downtown Association $70,000 per year each and it also funds a third of the Economic Development Corporation’s budget, along with San Benito County and local business owners.
