UNDERSTANDING REDEVELOPMENT MESS

ESPECIAL REPORTAGE ABOUT REDEVELOPMENT.

THE UNCERTAIN FUTURE OF RIVERSIDE PROGRESS, OTHER CITIES AND COUNTIES.

NEEDED CHANGES IN CA STATE GOVERNMENT.

Paul Sundeen is one of the Riverside Assistant
Manager, and Chief Financial Officer. He has been
one of the main city brains, to keep it out of the red.
His cooperation to this reportage has been the
main source of information. He's so savvy in
Accounting and Economics that sometimes we
could not reach to his level. He has a pleasant
personality, introverted, humility, and a sense
of humor too. His honesty and love for his job

makes of him to be loved by his peers.

This reportage about Redevelopment is directed to the majority of Riverside residents, who have openly said they don't understand what's going on between Sacramento and the California Redevelopment Agencies.

We don't blame the people because this is a very complicated matter. When we refer to people, please include us in this political and financial web.

Having said that, we are simplifying the subject in plain language to better understand it. We thanks Paul Sundeen, Riverside City Manager Assistant and Chief Financial Officer, for his cooperation and patience with us, and the input of Scott Barber, Mike Gardner, Paul Davis, Andy Melendrez, and Ralph Nunez.


What is Redevelopment?

Redevelopment is a process created to assist city and county government in eliminating blight from a designated area, and to achieve desired development, reconstruction and rehabilitation including but not limited to: residential, commercial, industrial and retail.

 How do Redevelopment Agencies Secure Funds?


The State Law makes available to Redevelopment Agencies a method of obtaining funds called “tax increment financing.” On the date the City Council approves a redevelopment plan, the property within the boundaries of the plan has a certain total property tax value. If this total assessed valuation increases, most of the taxes that are derived from the increase go to the Redevelopment Agency.


These funds are called “tax increments.” Usually, the flow of tax increment revenues to the Agency will not be sufficient in itself to finance the full scope of redevelopment activities and development projects. Therefore, agencies issue bonds. These bonds are not a debt of the City or County and are repaid solely from tax increment revenues. Tax increments can be used only in the same project which generates them, except for residential projects which benefit low and moderate income households.

Riverside benefited in great scale, using Redevelopment funds to restore blights, infrastructure and many projects, which have made of Riverside a modern city. It is appropriate to state that among the great cities in California, Riverside has been the only one not to be in the red, thanks to the excellent job done by our officials, especially by the Chief Financial Officer Paul Sundeen.

California State in Big Troubles

Governor Jerry Brown faced a budget deficit of almost $20 billions, reduced to about $10 billion. Several factors were involved in this state economic crisis: Poor administrations by ex Governors Davis, Swarchenegger, and Brown himself. Then, Brown decided to balance the state budget going after 400 Redevelopment agencies in California, taking their money, but making the situation worse for the cities and counties, resulting in unemployment growth and the suppression of projects. This action affects more the poor people, cutting services and help.

DRACONIAN DECISION BY BROWN

On June 29, 2011, Governor Brown signed Assembly Bill 26, which effectively eliminates redevelopment agencies. Every redevelopment agency must identify a successor in interest to manage its dissolution.


At the same time, Governor Brown signed Assembly Bill 27, which exempts a redevelopment agency from dissolution if such a redevelopment agency agrees to an "alternative voluntary redevelopment program." This means payment of local redevelopment funds to offset the State's budget short fall. It would have cost Riverside $19,619.428 the first year and $4,616, 336 annually there after. The City was inclined to accept such deal, in order to keep its redevelopment agency alive.

THE CALIFORNIA SUPREME COURT

But on December 29, 2011, the California Supreme Court ruled in the redevelopment litigation, regarding the lawsuit filed by the League of California Cities, the San Jose and Union cities, and the California Redevelopment Agency v. the State (Motasanto.) with the purpose to keep redevelopment agencies without funding the state with a percentage. The cases were named ABX126 and ABX127.


The California Supreme Court upheld ABX1 26 and struck down ABX1 27. Then the California Redevelopment Association and the League of CA cities tried to work with state legislators to develop legislation to revive redevelopment, in order to protect local communities, jobs creation and our economy. But, in case the legislature decides in favor of the petitioners, Governor Brown has to sign it, which, so far, it doesn't look he will.This reportage intents to simplify a very complicated matter, which only experts understand totally. There are billions of dollars involved, hitting very hard cities and counties. The City of Riverside has to pay Sacramento all the money obtained from redevelopment since June 29, 2011, when bill ABX1 26 dissolved the agencies, plus it won't get a penny in the future from such source. Exact amounts have to be disclosed.

MANY PROJECTS AFFECTED

In a memorandum written by the Development Department to the Mayor and Housing Authority, it does re-affirm the City as the successor agency to the Redevelopment Agency and the designation of the Housing Authority as the entity that will retain the responsibility for performing housing functions previously performed by the Redevelopment Agency.


The memorandum specifies that on February 1, 2012, redevelopment agencies will be dissolved, and successors agencies will be regulated by Oversight Boards to be created on May 1, 2012.

The Oversight Bord will consist of seven members. The Board of Supervisors will be represented by two members, one of whom shall be a member of the public. The Mayor will appoint two members, one of whom shall be a former agency employee. The County Superintendent of Education: one member. The Chancellor of California Community College: one member. And the largest special district taxing entity: one member.

The successor agency is required to make payments and perform other obligations due under the Enforceable Obligations Payments Schedule of the former redevelopment agency.

Some of the Riverside impacted projects are the Arlington Park Childcare Center, the Magnolia Police Station Improvements, the relocation of Victorian houses, Phase 2 of the California Square, Lucky Greek property exchange, Olivewood student housing development, contribution to Convention Center rehab, Villegas Park Community Center improvements, and many more.

We are stopping here, before we become crazy for real. We think we have given a good idea to our readers about what's going on with the redevelopment mess. We reiterate our gratitude to Paul Sundeen for being so cooperative and patient with us.

Paul Sundeen, without any doubts, is one of the top Riverside officials who has kept the City out of the red and maintain all the fundamental public services in the middle of the economic crisis. He and all members of the government involved in such a difficult task deserve our kudos, especially Scott Barber and ex City Mananager Brad Hudson.  Dollars and cents affected, in the amount of billions, will be disclosed when this "web" will be over. We expect compromise will be made, to avoid catastrophic results for cities and counties. Some legislators are not happy with the actions taken by Governor Brown and the CA Supreme Court.

We will get more details when Mayor Loveridge delivers the State of the City speech at the Convention Center, at noon, on January 19.

This has been one of the most complexes and confusing journalist tasks we have ever been involved in.

Honestly, we don't like it at all. Perhaps you either.

No doubts about it, Seizing Our Destiny has suffered a huge temporary set back.
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