10:00 PM PST on Monday, January 24, 2011

The Press-Enterprise

Riverside officials are poised to commit $220 million over 20 years to redevelopment projects, joining cities around the state in flouting Gov. Jerry Brown’s plan to phase out redevelopment agencies to help balance the state budget.

The City Council will vote tonight on a resolution opposing Brown’s proposal, and also on nine line items that include a new fire station downtown, a park on the city’s west end, a decade of spending on graffiti removal and code enforcement, and $140 million over 20 years toward affordable housing projects and programs.

Some of the money would come from loans that various city funds would make to the redevelopment agency, and some is a commitment of future tax revenue, City Manager Brad Hudson said.


“There’s really nothing new in here,” he said.

“We’re not just all of a sudden rushing forward with stuff we haven’t been working on. … This is the work of the agency and we don’t think it should stop midstream.”

Brown’s 2011-12 budget proposal would phase out redevelopment agencies, which funnel some property tax dollars into improvements such as libraries and road repair, and in some cases help private development.

Redevelopment agencies finance projects, often by issuing bonds, then collect the increased revenue from higher property taxes in the project area. Much of the tax growth goes to pay agencies’ debt.

Under Brown’s plan, agencies would continue to collect money to pay for existing debts and projects already under way, but some money that now goes to redevelopment would instead go to the state, which faces a $25.4 billion budget shortfall.

In response, local governments including Palm Springs, Long Beach, Los Angeles, Santa Monica and Riverside County have taken or are considering action to protect redevelopment revenues by issuing debt or committing to projects.

Brown has questioned the legality of some recent redevelopment votes, and in a statement last week he said redevelopment agencies should at least seek to create jobs now.

“These scarce dollars, which could be used to protect police, firefighters and teachers, should not be banked away for special projects,” he said.

Projects detailed

Riverside officials will consider moving forward with projects that are ready to go, such as the fire station, Doty-Trust Park, the relocation of two Victorian homes, and an overhaul of the Municipal Auditorium, as well as long-term programs such as the affordable-housing proposal and 10-year commitments to graffiti cleanup and a program to fix up commercial building facades.

The dollar total appears large when compared with Riverside’s existing redevelopment agency debt, which was $355 million at the start of this fiscal year.

But the affordable-housing funds, the largest single chunk, would be spent over 20 years, according to the city.

To pay for the brick-and-mortar projects, the city will lend the redevelopment agency money from caches such as public utility funds.

“It’s easy to take $5 from your left pocket and put it in your right pocket. It’s really just borrowing from yourself,” city Finance Director Brent Mason said.

Hudson characterized the loans as the city investing in the redevelopment agency, rather than U.S. treasury bills or some other investment vehicle.

Not issuing bonds right now gives the city more flexibility in case the governor strikes a compromise, he said, and he expects a lower interest rate on the internal loans than the bond market would offer.

“At some point in the future, we will issue bonds and retire these internal loans and notes,” Hudson said.

Councilman Mike Gardner said Friday he wasn’t sure the city should commit to the proposed spending in one swipe, but he wanted to hear the discussion at today’s meeting.

“I think it’s important that we talk about it and whatever the decision is, it’s a conscious decision that we’re doing what we think is in the city’s best interests,” he said.

Councilman Andy Melendrez held no such reservations.

He credits redevelopment with major improvement on University Avenue, where the two-block section between Douglass and Ottawa avenues used to generate nearly 1,000 police calls a year.


The agency bought and then razed liquor stores and hotels that were focal points for crime, Melendrez said, and now families will walk to the market pushing their children in strollers.

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