Desperate times are dangerous times, especially when the Legislature and governor grasp for quick fixes. A case in point is the new state budget, which aims to eliminate redevelopment agencies in California, thereby taking away even more local revenue in an attempt to fix California’s chronic budget problems against the will of the people.
This shortsighted decision is a massive financial threat to the city of Santa Maria. It could take away nearly $27 million the city is depending on to invest in public programs and services in coming years. It also poses big threats to Guadalupe (76 percent of its downtown is in a redevelopment agency area), Lompoc, Buellton, Santa Barbara, Goleta, and the county, all of which have redevelopment agencies.
Redevelopment has brought enormous, positive changes to Santa Maria for more than 50 years. It has created jobs, helped expand business opportunities, eliminated blight, improved infrastructure, and helped with many other community improvements.
Authorized under California law, our Santa Maria Redevelopment Agency (RDA) was formed in 1959. Since then, it has been involved with some of the largest city projects, including the Santa Maria Town Center East and West malls, Union Plaza and Central Plaza apartments, Perlman Park, Peppertree Plaza Shopping Center, Evans Park public housing, and the post office on Battles Road. Many of the businesses that were displaced from the downtown core during the redevelopment projects of the 1970s and 1980s chose to relocate in the new retail developments.
Santa Maria is at the tail end of its agency’s lifespan (our last project was completed in 1993) and the city has only five years left to complete paying off its RDA debt. That debt is owed for the three-level, city-owned parking structures at the Town Center East. Those were built to successfully attract and retain department stores.
I reiterate: When Governor Brown signed the state budget a couple of weeks ago, he imposed a huge financial risk onto the city. Santa Maria has five remaining annual debt payments to make: about $2.7 million in each of the next three years and a slightly smaller amount in the last two years. The property tax revenue generated within the redevelopment project area covers only $1.2 million, so the city’s General Fund covers the difference of $1.5 million per year. Eliminating Santa Maria’s redevelopment agency would tack the $1.2 million in debt service onto the city’s shoulders, which would force Santa Maria to cut services even more than the city already has done. To put this in perspective, $1.2 million is enough to hire nine police officers.
The city’s General Fund contributions to RDA debt became necessary because of events no one could have predicted. When Santa Maria began building its downtown parking structures in 1972, it borrowed against projected long-term sales and property tax revenue to pay for those projects. The projections held that a certain percentage of local taxes within the redevelopment area would be sufficient to repay the debt. But the passage of Proposition 13 in 1978, and the 1986 explosion of the Challenger space shuttle, which ended plans to build a West Coast shuttle hub at Vandenberg Air Force Base, left the Town Center mall struggling to keep retail tenants, and the tax revenue never reached anticipated levels. Beyond that, the city has a longstanding expectation that the redevelopment agency will repay the General Fund approximately $14 million that served as seed money for the RDA.
Because state leaders have chosen to brazenly violate the law, the California Redevelopment Association and the League of California Cities will file a lawsuit directly in the California Supreme Court seeking to have the redevelopment legislation declared unconstitutional.
Your state Legislature passed two budget trailer bills in an attempt to extort $1.7 billion from local redevelopment agencies. The objective is to extort so-called “voluntary” payments from cities in lieu of eliminating their redevelopment agencies. We in Santa Maria are being forced to “voluntarily” pay $331,000 this year, and then another $80,000 every year thereafter. Though this is obviously preferable to losing $1.2 million annually, it is nothing short of an illegal maneuver amounting to extortion!
The city is well aware of the state’s penchant for taking away local revenues from local governments to patch over its incoherent spending problems. Since 1992, the state has taken $93 billion in local property taxes, $3 billion in redevelopment funds, and more than $1 billion in transit and other transportation funds from local governments to balance its perennially out-of-balance budget. For Santa Maria, these revenue takeaways since 1992 have surpassed $28 million.
In 2004, voters passed Proposition 1A to prevent any increase in the local property tax “shifts” to the state and to protect sales-tax and vehicle license fee funds. In 2010, they protected redevelopment with Proposition 22. More than 66 percent of Santa Barbara County voters approved Proposition 22—including many voters in Santa Maria—thus sending the message to leave local revenues alone.
Increasing state revenue should not be achieved by stripping funding from local redevelopment agencies and eliminating local governments’ best tool for generating local economic development and growth. We are in the midst of the worst economic downturn since the Great Depression, and now is not the time for the state to continue to rob local governments of their revenues: It’s time for the state to live within its own means.
Larry Lavagnino is the mayor of Santa Maria. Send comments via the opinion editor at econnolly@santamariasun.com.
This article appears in Jul 21-28, 2011.