Wednesday Jan 19 2011
Rocklin looks to avoid tax grab
By: Jon Brines, Placer Herald Correspondent
Rocklin city officials, blindsided by Gov. Jerry Brown’s new state budget proposal to scrap redevelopment agencies statewide, are now trying to figure out what to do. “He said it was going to be dramatic so that was an eye opener,” Mayor George Magnuson said of Brown’s budget announced last week. The proposal would grab $1.7 billion of the state’s redevelopment money for the next fiscal year to balance the budget, and use all the money in future years to fund schools, counties and other entities. The tax grab would be accomplished by dissolving the state’s 400 redevelopment agencies including one run by the city of Rocklin. Right now, those agencies are allowed to collect property taxes for four areas: 18 percent is typically used for infrastructure and infill projects, 41 percent for municipal bond and debt payments, 20 percent for affordable housing set-asides and 21 percent as payments to schools and counties, according to the State Controller. Dismantling the redevelopment system in Rocklin could force the city, already cash strapped, to rethink the budget to keep the status quo. “That would have a lot of impact on how we currently do business,” Rocklin City Attorney Russell Hildebrand said at last week’s city council meeting. Hildebrand told the city council he’s working with the city’s staff to come up with a plan of action. “We are looking at options and contingency planning for, ‘what if this actually goes through,’” Hildebrand said. At issue is how it would force the city to deal with its debt to municipal bondholders. “If that money is not encumbered under contract, then we would be obligated to immediately buy back debt,” Hildebrand said. That’s something that would upset the city’s balanced budget at a time when planning for the next fiscal year with a new city manager is on the horizon. “It is a little early to tell exactly how the trickle down (will affect the city), but if we wait to try set a course of action in conjunction with our budget process, we would have no chance to make the kind of adjustments we would need to do,” Hildebrand said. Magnuson said the plan might have an impact on new projects. “My understanding is the (state) is just trying to freeze us from spending anymore money. So the money we collect would first pay our debts then any extra money left over would revert back to the schools and to the county,” Magnuson said. It may have a big impact on the city’s prized infill project, the new downtown, which has spurred area business owners to organize the Rediscover Rocklin group. One of the centerpieces of the Downtown master plan involves the historical Big Gun quarry site behind City Hall. Just this fall, the city quietly put more than a million dollars of its redevelopment money aside to purchase the quarry. And while Brown’s proposal would dismantle the agencies, it would allow Rocklin to honor existing agreements. That’s something that has Rocklin City Councilman Brett Storey worried. “I am interested to know if there is a way out of that — if the (state) were suddenly to come down with something different a week from now saying, ‘You are all going to be obligated anyway,’” Storey said during the meeting. Hildebrand told Storey everything under contract before the state budget is signed, is secure. “The (quarry) transaction is completed. I believe to the best of our information and that would be considered fully encumbered and we would have the finances through the years to pay for that,” Hildebrand said. “It is dollars that are not formally encumbered, or under contract.” Other cities around the state are now making a mad dash to tie future revenues to any kind of contract— in effect laying claim to the money Brown wants. It’s unclear if Rocklin will follow suit. Officials from the Rocklin Area Chamber of Commerce and the Rediscover Rocklin group decline to comment on the state budget plan. Redevelopment dollars were a favorite target of the Arnold Schwarzenegger administration, which grabbed $2 billion over the last two years to balance budgets. City officials thought they could rest easy after a November ballot measure put a stop to state raids on redevelopment agencies. Prop. 22 protected redevelopment funds, but not the agencies themselves. Even so, last year the city struggled with layoffs, more budget cuts and its employees taking a 5 percent pay cut across the board. City Councilman Peter Hill said the new proposal only amounts to political theater. “The people who are involved at the Capitol on a day-to-day basis have quickly come to the conclusion that this is not an achievable thing we can do,” Hill said. “The thought now is that this is more of a bargaining chip than anything else. They haven’t figured out what (Brown) is bargaining for yet.” The next city budget is due out in four months.