After last Thursday’s California Supreme Court rulings in favor of the State of California’s actions to end redevelopment agencies through legislation ABX1 26 while at the same time denying cities the option to continue through the legislation package ABX1 27 (“voluntary payments”) makes a difficult road ahead for the City of Turlock.
Redevelopment Agency (RDA) areas are created to help cities reinvest property taxes back into the designated areas to eliminate blight, stimulate economy, and assist in providing affordable housing.
On October 31, 2011, the Turlock City Council made a split vote of 3-2, with DeHart and Bublak in opposition, to continue toward meeting deadlines in ABX1 26 and ABX1 27 legislation. The first payment of $2.46 million for the City of Turlock was to be due January 15th, 2012, and the second payment of $615,000 was to be due May 15, 2012.
"We are disappointed in the ruling and the actions of the State," said Turlock City Manager Roy Wasden.
The City of Turlock will continue to receive funds (property tax revenue) related to their enforceable obligations filed with the state back in August. However, expenses funded through the Turlock Redevelopment Agency (RDA) include funding of seven positions and a portion of administrative costs for the following departments: City Council, City Manager, City Clerk, Finance, City Attorney and Human Resources.
Back in September the City of Turlock reported that with the dissolution of the City’s RDA, significant impacts on city budget would occur since $500,000 in current administrative, fixed and employee costs are paid through the redevelopment agency.
The City of Turlock will receive an increase in property tax revenue into their General Fund associated with the normal cities share of tax collected. However, this increase will not be the amount that was being received through the RDA. The staff will start work immediately on projections and expenses that will need to be funded in order to make recommendations to Council. Ultimately it will be a policy/budget decision by Council as to what is continued and what is eliminated.
“I am very disappointed by the State Supreme Court’s decision eliminating redevelopment agencies in California,” said Turlock Mayor John Lazar. “The Turlock City Council will be receiving a briefing by staff at next week’s City Council meeting on the ramification of this decision and how we will proceed to comply with the law.”
Current major projects that the RDA will continue include the Public Safety Facility and the Avena Bella low income housing complex. Other expenses that will be allowed to continue for this fiscal year , but will end as of June 30th, 2012, include Mobile Home Rent Subsidy, Turlock Regional Industrial Park infrastructure improvements, Downtown Housing Plan, personnel costs and the RDA’s share of lease, taxes, insurance and maintenance of City Hall and Housing Department. Details of expenses can be found on the Enforceable Obligations Payment Schedule:
The legislation was the result of what started in the 2009-2010 budget year when the state "grabbed" money from city RDA’s to fill holes in the state budget. The California Supreme Court later determined this to be unlawful. State legislation then started to work on abolishing the RDA’s while cities worked to pass Proposition 22 which prevented the state from raiding local dollars. The new legislation ABX1 26 to abolish RDA’s passed legislature while Proposition 22 was passed by voters. This was a main argument for the Supreme Court case, however with the abolishment of RDA it is no longer city money to be raided making Proposition null and void for the RDA situation.
There are three bonds dating to 1999, 2006, and 2011, totaling $86,909,207.28 that the City of Turlock will continue to receive $3,296,252.12 from the state to pay their annual obligations on bonds. These bonds were used to complete several major projects for Turlock including redevelopment of Downtown Turlock, infrastructure for Monte Vista Crossings, infrastructure for Turlock Regional Industrial Park, rebuilding the Carnegie Arts Center and improvements at Turlock High School’s Debely Stadium as well as many smaller projects throughout the community.