Wednesday Nov 09 2011
Should city keep redevelopment agency?
By: Jon Brines, Placer Herald Correspondent
It'll cost Rocklin $1.7M upfront to keep and hundreds of thousands more later
The city of Rocklin is facing a dilemma that could cost Rocklin millions of dollars in tax money over the next three decades. The problem stems from the state’s new law that abolished redevelopment agencies statewide with a caveat that cities desiring to maintain an agency would have to cough up millions. For Rocklin that means an estimated one time payment to the state of $1.7 million with hundreds of thousands of dollars more every year for more than a decade. During a rare joint meeting with City Council and the Redevelopment Citizens Advisory Committee on Tuesday, Rocklin’s Chief Financial Officer Kim Sarkovich reported the city would be in debt for a while. “If you opt in, you add $1.7 million,” Sarkovich explained. “The RDA will have $1 million negative at the end of year 2015. By January 2020, the (Rocklin) RDA will be self sufficient, the break even point.” To make matters worse the agency already owes the city $948,000 for work on the new library building on Granite Drive. Why does the city want to go into this kind of debt for so long? If the RDA is dissolved, over the next 25 years, the city would lose control of up to $49-million dollars of its property taxes and housing funds. “Those dollars would be redirected to other agencies,” City Manager Rick Horst said. The state wants that money to plug its own budget shortfall. Redevelopment Committee member Jerry Mitchell said the state’s law is very complex. “They set it up, it seems, to be attractive enough to bait us into this,” Mitchell said. “If we didn’t do this we would clearly have a lot less money to work with, but we’d have greater control over that money.” Mitchell believes maintaining the redevelopment agency may not be worth the red tape required to work with the state, particularly if the economy gets worse. “I’m very skeptical,” Mitchell said. “Could the (state) do even more mischief in the future? It sounds like they can.” Nearly 40 cities statewide have indicated they’ll give up their redevelopment agencies, according to the city. Rocklin has hired a consultant from Fraser and Associates to analyze the fiscal impact and make recommendations to the city. What makes matters worse is the uncertainty of the pending action by the California Supreme Court. The court is being asked to determine if the new law is constitutional. Opening arguments begin today, however, the court ruling may not be issued until Jan 15. Mitchell said he hopes the court throws out the law. “There are all kinds of questions about whether these (fiscal) forecasts come true and what the state is going to do,” Mitchell said. The city has a short window of time to make a decision about the future of its Redevelopment Agency. If the Supreme Court upholds the Governor’s abolition, the city would have 60 days to decide whether to pay to keep the agency running or to opt out. City Manager Rick Horst said he’s not convinced the city can afford to keep the agency. “RDA is nice, Love to have it. Could have some great projects, but it’s not going to pay for police, fire and roads, which are the core services of the city,” Horst said. “That’s a decision the council ultimately has to make.” Council member Brett Storey said he has his doubts, but wants more information. “We’ve all seen how complex this is,” Storey said. “It would be nice to have a redevelopment agency, but the cost benefit ratio may not be high enough to have the city subsidize it.” The two groups will meet again on Dec. 13 to hammer out a plan after reviewing more concrete numbers provided by the consultant. Redevelopment member Jefferey Foltz said when all is said in done the chaos may make the city stronger. “When the agency is able to stay and continue we (should) really look at value of added projects that really create the tax increment and boost things up,” Foltz said. “We strongly have to look at how we can make it work. It’s a tough one.”