City’s development cash tied up for years to come

The Scotts Valley City Council, acting in its role as the city’s redevelopment agency, adopted a budget for the 2011-12 fiscal year on June 15, against the backdrop of an uncertain future for local redevelopment agencies.
“It doesn’t look good,” Vice Mayor Donna Lind said. “The writing’s on the wall.”
For the coming fiscal year, the redevelopment agency will call on $4.94 million from city property tax revenue to be used for, among other things, creation of low-income housing, support for local industry and economic growth, and other community projects — most recently the brand-new library.
All this comes at a time when the possibility looms of the state government abolishing redevelopment agencies statewide and seizing their assets to offset a massive deficit.
Much of the budget approved at the meeting anticipates state seizure of the city’s redevelopment money.
Scotts Valley, Lind said, has worked hard to soften the blow if the state does take the agency’s assets, transferring properties and other holdings into the city’s name.
“We want to prepare for the worst, but hope for the best,” Lind said. “If they’re going to take those funds covered by the RDA, we need to get those assets protected.”
According to City Manager Steve Ando, the state is already one of the largest drains on Scotts Valley’s Redevelopment Agency’s funds.
Before it expires in 2016, the state-mandated Supplemental Educational Revenue Augmentation Fund payment alone will cost the agency nearly $1.5 million in total — $358,157 for the present fiscal year.
Payments to the older Educational Revenue Augmentation Fund, which was in effect from 2003 to 2005, are projected to cost $484,214 between 2012 and 2015.
Due in part to state payments, the agency has augmented its budget out of its reserves, this year to the tune of $217,409.
The plan approved June 15 will mean that by the 2014-15 fiscal year, the RDA will have used up its savings.
That could require a short-term solution, possibly a two-year loan, until the expiration of the SERAF and ERAF payments in 2016 will enable the agency to pay back the loans and operate in the black again, Ando said.
“The goal is to get past the period of time where we have to pay the state,” Ando said. “That’s what’s causing all these problems.”
Many redevelopment projects have been planned out for some time, Lind said, and it is generally understood at City Hall that if the contract for a project is already green-lit, state seizure will not affect it.
“Many of the things were already planned out and in the works already, so we didn’t have to scramble as much (as other municipalities),” Lind said. “We haven’t just let that money sit; we’ve put it to good use.”
“Without the RDA, I don’t think the library would’ve happened,” she added. “What else might we miss if the RDA goes away?”
Legislation in works to protect RDA cash
Councilwoman Stephany Aguilar, Scotts Valley’s representative to the League of California Cities, said two proposed state Senate bills would regulate redevelopment agencies statewide rather than eliminate them.
Senate bills 286 and 450, both supported by the league, propose to redefine the roles of redevelopment agencies, as well as clearly define how redevelopment funds can and cannot be used.
“That would help circumvent abuse (of redevelopment funds), and it’ll help the state,” Aguilar said.
Meanwhile, no new redevelopment projects are on the horizon for Scotts Valley until the state determines its course.
“We certainly wouldn’t plan anything new until we know (the state’s plan),” Lind said.
“The redevelopment funds have allowed us to do so much in so many areas. We really feel those funds should be protected.”
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