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A dangerous game of RDA keep away in Manteca

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POSTED March 1, 2010 1:32 a.m.

Redevelopment agencies can indeed be great tools to stimulate economic growth and fight blight.

Two prime samples of the RDA assistance stand today in Manteca – the teeming 362-acre Spreckels Park that replaced a closed sugar refinery and Kelley Brothers Brewing Co. that rose from the burned out shell of the El Rey Theatre. In both instances the assistance was in the form of low-interest loans that have been paid back in full. They helped leverage private sector economic investments at least 10 times larger than the actual loans.

Proponents of expanding the RDA project area note that the RDA is the last available economic development tool that cities have and that they help shield money somewhat from the state’s grubby hands. They point out correctly that state law makes sure that the school funds lost from property tax increments that go to an RDA are backfilled. However, state-law is a joke when the California Legislature can’t balance the state budget and starts acting like Ali Baba and the Forty Thieves.

In essence, shifting future increases in the city’s share of property tax to the RDA is a game of keep away from the state as well as being an effective tool for economic development and to fight blight.

Manteca, though, is about to enter uncharted and potentially dangerous territory with a proposal Tuesday before the City Council to include 11 new areas into the RDA project area due to “blight” caused by foreclosures.

Manteca’s property values dropped 14.7 percent in 2009. They were driven downward by the bargain prices that foreclosures were selling for in Manteca neighborhoods. Citywide, Manteca’s general fund suffered a $750,000 hit from property tax receipts.

Since there doesn’t appear to be a specific directive in the proposed contract with Urban Futures for work related to the expansion of the RDA project area to include the 11 blighted neighborhoods to address it, let’s assume that $250,000 of that general fund loss were in areas already in the RDA and the other $500,000 was outside the RDA.

Again, just for the sake of an example, let’s say half of the $500,000 of general fund losses from property tax was in the non-RDA areas of the city and that the 11 neighborhoods represent about $250,000 of that amount.

That means when the property values get back up to 2008 levels at some point down the road, Manteca will lose $250,000 a year to the RDA. The remaining $500,000 in lost property taxes would be regained when values shoot back up to the 2008 levels in the existing RDA areas and the portion of the non-RDA areas that aren’t in the project now.

That means the city will perpetually short the general fund $250,000 a year or enough to cover the salaries and benefits of two police officers.

This wasn’t a concern in the past because the city never expanded the RDA project area before during a period of substantial property value retreat.

Proponents correctly point out that RDA investment should stimulate more sales and property tax returns to the general fund. However, the economic realities have changed.

That is not to say the city shouldn’t proceed with expanding the RDA territory but they should do so with serious concern about the impact on the general fund.

Why not have the redevelopment experts doing the $205,000 study funded by RDA receipts see whether the costs associated with having building inspectors and planners deal with projects within the RDA project boundaries can legally be charged off to the RDA? That way it would shift costs off the back of the general fund and might even make up for more than what would be lost to the RDA.

At the same time to make sure that all of the new RDA property tax revenue generated in the future just doesn’t go to spur new economic development the “adopting ordinances” for expansion into the 11 additional neighborhoods should require language that half of the non-affordable housing mandated portion of the RDA property taxes collected in those areas should go back into them in order to replace aging infrastructure such as streets and parks.

That means 40 cents of every RDA dollar taken would be driven back into the 11 areas not to put pipe in the ground for new projects but to actually improve blighted conditions in said neighborhoods.

Tying the hands of the RDA now is essential to assure that the economic clout added to the RDA doesn’t simply keep going to new and better projects and end up leaving the rest of Manteca behind.

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