Josh Dulaney, Staff Writer
Posted: 09/30/2011 02:50:44 PM PDT

SAN BERNARDINO – A slew of redevelopment projects are on the shelf as officials await word from the state Supreme Court on whether a redevelopment-related law is constitutional.

“There are way more problems than we have dollars to address them with, and by reducing redevelopment, it simply doesn’t help our situation,” said Emil Marzullo, interim executive director of the Economic Development Agency.

Redevelopment projects on hold include Carousel Mall, offsite improvements for McDonald’s near 2nd and G streets, and several road improvement efforts.

Two bills, A.B. x1-26 and A.B. x1-27, will eliminate redevelopment agencies and require them to send tax money from new projects to Sacramento in order to remain in operation.

Cities were given a deadline of today deadline to pass a “continuation ordinance” to keep RDAs afloat, in exchange for making hefty payments to the state.

In San Bernardino’s case, that means an initial $14 million payment in January, and Marzullo said some of the funds will be borrowed from the city’s low and moderate-income housing program, which is allowable under the law.

The League of California Cities and the California Redevelopment Association filed a lawsuit, and the Supreme Court in August agreed to hear the legal challenge to legislation that would take $1.7 billion from the state’s nearly 400 redevelopment agencies this year.

The case is expected to be wrapped up by Jan. 15, the day RDAs are required to send a check to Sacramento if they decide to remain open.

In the meantime, San Bernardino officials say redevelopment is needed to improve the city’s aging buildings and prepare sites for businesses to come.

“That’s why redevelopment, particularly in older cities, is an absolute necessity, because the free market will not react and do what we do, because there’s too much risk, there’s too much time, there’s too much cost,” Marzullo said.

As an example, he mentioned the RDA investment at the former site of the Paradise Hotel on 5th and H streets, a notorious haven for drugs and prostitution in the past, now home to construction for an In-N-Out Burger.

Similar to several spots in the city – Marzullo said he is dealing with issues going back to the 1920s – the RDA had to take down properties at the location, and clean out the asbestos and lead-based paint at the site.

After clearing the property, ground-penetrating radar found a waste-oil tank plugged under the site prior to when the hotel was built decades ago, Marzullo said.

“It’s the box of chocolates – you never know what you’re going to get,” Marzullo said of redevelopment work in a city where railroad-era waste and other contaminates stew beneath the ground.

The city spent three years and $3 million on the effort at 5th and H streets and then sold the property for $800,000 to the legendary burger chain, Marzullo said.

While he understands the public’s concern over a perceived giveaway, Marzullo’s response is matter-of-fact:

“That’s what redevelopment does, because without redevelopment, In-N-Out nor anyone else would have gone onto that site and spent that kind of money for that location in downtown San Bernardino. They would have gone someplace else. They would’ve gone to a site that had never been built on.”

Marzullo said a nearby and much smaller In-N-Out Burger at 2nd Street produces about $80,000 in sales-tax revenue annually, more than the entire Carousel Mall.

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