Archive » March 11, 2011
PLANS FOR AVENUE OF FLAGS MAY BE UPENDED
By Jeremy Foster, Staff Writer
Just as the city of Buellton sets about transforming the downtown area into a pedestrian-oriented center, a perfect political storm threatens to throw its plan into disarray.
Gov. Jerry Brown is proposing to solve a $25.4 billion shortfall in part by scrapping California’s Redevelopment Agency funding system, which improves blighted areas through property tax revenues. It’s a move that would make it all but impossible for the city to move forward with plans to renovate Avenue of Flags, and to parlay an unused piece of land near McMurray Road into a commercial development payoff.
City officials are taking the proposal seriously and have appealed to residents on the city’s website, asking them to send letters to their representatives in the legislature and even to the governor. Last week, a handful of city leaders and speakers from the private and public sectors in the county appeared at a press conference in Goleta to discuss the economic fallout of dismantling a nearly 60-year-old funding system.
Buellton, which incorporated in 1992, and other relatively new cities, established a redevelopment agency through a contract with the county to get seed money to grow its infrastructure. City leaders say downtown Buellton is rich soil whose fertility is threatened by the much-too-wide scythe of Brown’s proposed budget cuts.
“When you see the blighted downtown area in Buellton, it speaks volumes about why a redevelopment agency is important,” said Buellton City Manager John Kunkel. “If someone drives down Avenue of Flags, they’ll see old, dilapidated buildings, hotels out of use, as far as overnight stays, several vacant lots and areas without sidewalks.
“Now, anything we’d be thinking about doing there is in jeopardy,” he added.
Mayor Ed Andrisek said at the recent conference that Buellton’s redevelopment agency has already spent thousands of dollars and “countless hours” of staff time on the city’s visioning project to renovate Avenue of Flags.
“Buellton’s Redevelopment Agency has already paid for previous California budget shortfalls to the tune of $236,891,” Andrisek wrote. “The loss of potential projects, which translates to loss of jobs, is not a good way to solve the budget problem in Sacramento and points to the serious disconnect between Sacramento and its citizens.”
Kunkel said the governor’s proposal is not only short-sighted but also potentially unconstitutional. Legal questions loom over whether Brown’s proposal violates Proposition 22, a state ballot measure that passed last fall stopping the state from raiding local coffers. The potential conflict is the crux of litigation proposed by either the California League of Cities or the California Redevelopment Association.
“The proposal flies in the face of the voters,” said Kunkel, adding that he expects affected cities to join the legal battle to fight approval of Brown’s proposal.
Brown supporters reportedly say Prop 22 prevents the state from siphoning money from redevelopment agencies, but it doesn’t stop the legislature from abolishing those agencies.
In all, Brown’s proposal would save the state $1.7 billion, a relatively small amount compared to the gaping budget hole, but it’s a significant chunk of the $12.5 billion in cuts he hopes to pass, including $1.7 billion to Medi-Cal, $1.5 billion to CalWORKs, $750 million to the Department of Developmental Services, $1 billion between the University of California and the California State University systems, and $308 million for a 10% cutback in take-home pay for state employees not currently covered under collective bargaining agreements.
First District Supervisor Salud Carbajal said he supports the governor’s proposal. If redevelopment agencies are spared, vital programs will absorb more cuts. “It’s unfortunate in the sense that this move pits one unit of government against another,” he said. “So at the end of the day, it’s a zero-sum game.”
“But what this will do is help us as a county provide more services in health care, mental health services, housing programs, public safety programs, and other things we’d like to do but can’t because our dollars are siphoned to redevelopment agencies.” The county’s general fund contributes $8 million in property taxes to local redevelopment agencies, and the County Fire District spends more than $1 million, according to county estimates. “Why should the broader constituency of Santa Barbara County in the unincorporated area and in the cities be negated broader services so we can focus tax dollars in certain small areas throughout the county?” Carbajal said.
Kunkel rejected Carbajal’s assessment, noting that most of Buellton’s redevelopment dollars are from Valley residents. Buellton, he noted, entered into a 40-year contract with the county 12 years ago as part of a win-win agreement for both entities.
After the contact ends, the county gets the bulk of the property tax revenue, meaning that if development increases in value, the county gets a greater tax return on its investment. Moreover, K-12 schools and community colleges claim roughly 57 cents of every dollar from the city’s property tax, while the city gets 16.6 cents.
Goleta, which became a city in 2002, has been leading the local charge against Brown’s proposal. The city is at the cusp of moving forward with its flagship project, a $25-million flood-channel improvement for San Jose Creek, depending on $14 million in redevelopment dollars to prevent flooding of Old Town Goleta, which was engulfed in water during the storms of 1995 and 1998.
“We probably won’t be able to move ahead at all without redevelopment money,” Goleta Mayor Margaret Connell said. The city, like hundreds of others across the state, has raced to issue millions in bonds through its redevelopment agency, shielding its current dollars before Sacramento is expected to eliminate its agency. The state could counter by making its plan retroactive. “If that happens, I don’t know what it’s going to do to our revenue,” she said.
She speculated that eliminating redevelopment agencies could lead to a deluge of lawsuits against the state, costing it more than what it expects to save by eliminating the agencies.
Kunkel said though the city doesn’t expect to lose any funds, it hasn’t sold any bonds for future projects, a matter that is expected to be discussed by city officials. He worries that if cities do sue and prevail in the courts, there may be a backlash. “It would not be out of the realm,” he said. “You have a lot of people who read negative reports about redevelopment agencies, and suddenly you could have a groundswell of people pushing for a ballot initiative in 2012 that would eliminate (them).”
Kunkel was alluding to statements made by State Controller John Chiang, who contended that redevelopment agencies have shortchanged schools by at least $40 million a year and raised questions about their effectiveness and accountability. The remarks were a serious blow to the agencies’ collective reputation, he said, but they are criticisms he embraces.
“It’s like the city of Bell,” he said. “There’s always going to be bad apples out there. Anything that can be done to make redevelopment agencies more efficient and accountable, I’m all for it.”
As for what will happen to Buellton’s proposed infrastructure projects if Brown moves forward with his plan?
“We’re talking to the property owners of the area for the Village project (along Highway 246 across from Albertsons), and we’d like to see commercial and low-cost housing units,” he said. “We’ll still attempt to move forward with restoration of Avenue of Flags.
“But it will be a feat if we can get people to invest in blighted areas when they have to fork over the lion’s share of the cost,” he said. “If redevelopment agencies fail to exist, we’ll be in some dire straits.”