City, county prepared for loss of redevelopment agencies

On Feb. 1, redevelopment agencies throughout California will become a thing of the past as the court-delayed California State Assembly Bill 1×26, known as the Dissolution Act, takes effect.
The news comes on the heels of a Dec. 29 decision by the California Supreme Court to overrule the objections of the League of California Cities and the California Redevelopment Association. The ruling affirmed the legality of Gov. Jerry Brown’s controversial plan to stabilize California’s deficit by forcibly redirecting redevelopment funds.
With the ruling, the property tax money that would have been shunted to redevelopment agencies will be redirected to cover costs of schools and other local entities, lessening the amount of money needed from Sacramento.
As a result, officials of the city of Scotts Valley and the county of Santa Cruz rushed this week to approve what’s known as a successor agency, tasked with tying up the loose ends of the redevelopment agencies.
It jobs will include paying off the former redevelopment agencies’ existing debts, disposing of their properties and assets to help pay off those debts and, finally, returning revenues to the local government entities that receive property taxes.
The board of supervisors voted Tuesday to assume the successor-agency role for the county, while the Scotts Valley City Council voted at a special meeting Wednesday to do the same for the city’s redevelopment agency, beating the deadline.
Scotts Valley
In anticipation of a state-mandated shutdown of redevelopment agencies, the Scotts Valley City Council, acting as the RDA, has worked with city attorney Kirsten Powell for most of the past year to shield as many assets as possible from state seizure — particularly real estate.
“We saw the writing on the wall,” said Mayor Donna Lind, “and we haven’t let the funds just sit there waiting.”
Several properties within Scotts Valley were transferred from the redevelopment agency to city ownership, including parcels on Erba Lane and those designated for the Town Center project.
“We’re in better shape than some,” she said. “It could’ve been disastrous.”
Lind said the possibility of losing redevelopment agency funding spurred the city to make a priority of projects that wouldn’t have been possible without that money, such as the new Scotts Valley Branch Library.
“Obviously, we’re disappointed (in the court’s ruling),” she said. “The redevelopment agency accomplished so much — but nothing caught us by surprise.”
Powell said she thought the city’s actions to build as much as possible and its attempts to protect the redevelopment agency’s properties would keep the Town Center project alive, though it would face greater challenges.
“Obviously, (the ruling) has an effect,” she said. “At this point, it’s unknown — it just makes it more difficult.”
Santa Cruz County
Redevelopment agency-owned lands in Santa Cruz County have undergone similar shuffling to protect them from the state, as lands were turned over to county control before June 30, the original deadline to transfer assets.
“We’ve been working on this for a year,” said 5th District Supervisor Mark Stone. “We transferred as much as we could, so it doesn’t get swept up.”
“I think we got most everything that was important.”
According to county Auditor-Controller Mary Jo Walker, the county’s redevelopment agency received $23 million in tax revenue last year. As far as distributing the diverted funds, Walker said, most will pay down the former agency’s debts, with the remainder portioned to schools, fire districts and the county itself.
As the redevelopment agency is eliminated, Stone said, so goes much of the county’s capacity for creating subsidized, low-cost housing.
“That was our primary source for low-income housing,” he said. “Without a replacement resource, those programs will just end.”
How it works
Redevelopment agencies, created by the California Legislature in 1945, have used property tax money to remove blight and spur economic growth by providing incentives to businesses to build or expand operations.
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