Cities rush to spend redevelopment money

Gov. Jerry Brown's plan to use $1.7 billion in redevelopment money to help plug the state's $25.4 billion deficit is hitting a major roadblock: Cities around California are rushing to lock up the money before the state can get its hands on it.

About a dozen cities, including Napa and Fremont, convened emergency meetings in recent days to fast-track the approval of projects worth a combined $1.5 billion. The moves are essentially an end run around the new governor's budget plan, which calls for the elimination of redevelopment agencies around the state but allows cities and counties to continue working on existing projects if contracts are already in place.

The rush apparently was sparked by a false belief that the Legislature planned to push through legislation this week that would prevent cities from approving any new redevelopment funds. The nonpartisan Legislative Analyst's Office suggested last week that lawmakers consider such legislation, but no bill has yet been introduced, according to a spokeswoman for Assembly Speaker John Pérez, D-Los Angeles.

It's not even clear yet whether there is enough support among lawmakers to implement Brown's proposal to eliminate redevelopment agencies.

Taking no chances

Local officials weren't taking any chances, however.

In Napa, city officials voted unanimously Saturday to commit about $82 million in redevelopment funds to a number of projects, including the construction of $33 million worth of affordable housing that will not be paid off until 2052.

In Los Angeles, officials hastily approved $930 million Friday for a list of projects that runs 19 pages long.

And in Fremont, city officials voted Monday night to approve $133 million worth of bonds to pay for a redevelopment project that includes streetscape improvements and the construction of a new BART station. Redevelopment Director Elisa Tierney said all of the approved projects were scheduled to be undertaken this year anyway.

Napa Vice Mayor Jim Krider said the Napa City Council - which also acts as the redevelopment agency board - wanted to get the funding approved before Tuesday, when officials believed the Legislature might put a halt to any new redevelopment funds.

"We thought it was prudent, if we had any interest in trying to assure the funds were available, to have the meeting as early as possible and before Tuesday," Krider said. "There's a lot at stake."

Tierney said Fremont officials also thought they had little time to approve projects.

Under the budget proposal introduced by Brown on Jan. 10, the state's 60-year-old redevelopment program would be disbanded this summer. The program allows agencies to borrow against future property tax increases in a project area, and use that money to spur economic development.

Brown's plan

Brown instead wants to take those property taxes and, after paying off existing debt, funnel the money to cities, counties and school districts directly. Those payments wouldn't begin until the 2012-13 fiscal year, however: for the 2011-12 fiscal year that begins July 1, the governor plans to use the redevelopment money to help plug the state's general fund budget gap.

In order to allow economic development to continue in jurisdictions that want it, Brown also has proposed allowing cities to pass bonds with just 55 percent of voter support, instead of the current two-thirds threshold.

On opposite sides

Brown's proposal has earned the ire of redevelopment boosters around California, who argue that the last thing the state should be doing during a recession is taking money away from economic development. Firefighters, teachers and others, however, contend that the redevelopment program is a money grab by private developers, and that its elimination would help protect core services such as public safety and public education.

The governor's office could not say how the approval of new redevelopment projects would affect his proposal.

Elizabeth Ashford, a spokeswoman for Brown, issued a terse statement Tuesday.

"We hope that the redevelopment agencies rushing through billions in taxpayer dollars are going to use these funds to create jobs now," she said. "These scarce dollars, which could be used to protect police, firefighters and teachers, should not be banked away for special projects."

Carroll Wills, a spokesman for the California Professional Firefighters, criticized cities such as Napa for approving the projects on a holiday weekend.

"The city was closed but the gravy train for developers was open apparently," he said, adding that the governor's proposal "actually returns money and authority to local government entities (that) absolutely are entitled to use that money for redevelopment projects.

"The governor is proposing giving cities even more flexibility, but when you put that money in the general fund, redevelopment will have to compete with all core services, not just get passed to developers in emergency meetings," he said.

E-mail Marisa Lagos at mlagos@sfchronicle.com.

This article appeared on page A - 1 of the San Francisco Chronicle