It played a pivotal role in preventing a shuttered Spreckels Sugar refinery from turning into cancerous blight. It helped over 300 low-income Manteca seniors make essentially cost-free health and safety repairs to their homes. It made Big League Dreams possible and it put infrastructure in place that allowed Manteca to capture everything from a Costo to a Kohl’s Department Store.
It is - or unless something changes - was the economic stimulus tool known as redevelopment agency law.
The California Supreme Court on Thursday gave Gov. Jerry Brown and the state legislature the right to pull the plug on more than 400 redevelopment agencies including ones in Manteca and Ripon.
Ripon had hoped to use RDA money to expand Mistlin Sports Park into a baseball Mecca. Manteca was hoping to use RDA funding as the cornerstone for extending infrastructure to more than 100 acres owned by the city to make it possible for McWhinney Development to invest $200 million to build a Great Wolf Resort and indoor water park immediately west of Costco.
Redevelopment agencies will no longer exist as of May 1 unless a compromise is worked out in the legislature in early 2012.
As things stand now, the ruling means the state can free up $1.7 billion a year by redirecting RDA funds to local school districts. And since the so-called “pay to play” proposal to allow RDAs to continue in some form if they gave up money to the state was struck down by the state’s top court as well, it will send money back to the general fund of the various cities and counties that operate RDAs.
The ruling appears to assure that existing contracts, bonds and existing financial obligations entered into using RDA funds will likely be protected under federal contract law.
Manteca RDA debt at $458M
Manteca RDA at mid-year had a $458 million debt. It includes $255 million in pass through payments to various taxing entities in the area including the Manteca Unified School District and San Joaquin County that the Manteca RDA is under obligation to honor over the next 20-plus years.
The next biggest chunk is almost $138 million in bond payments for money the RDA borrowed. The single biggest project bond proceeds were used for the $30 million Big League Dream sports complex. State law required RDAs to go onto debt in order to exist. They money borrowed is paid back from future property tax revenue.
Manteca City Manager Karen McLaughlin said she was “extremely disappointed” at the court’s ruling. McLaughlin said redevelopment in Manteca has been extremely successful over the past 25-plus years.
“RDA has helped to stimulate and upgrade the downtown area, turn an abandoned sugar beet factory into the lucrative Spreckels Industrial Park, build a project like Big League Dreams and Stadium Center, and bring Bass Pro Shops and the rest of the Promenade Center to town,” McLaughlin said. “Without Redevelopment, these projects would not likely have otherwise been possible.”
McLaughlin noted city staff will start evaluating other financial options to extend the Daniels Street infrastructure that RDA made possible to accommodate the Stadium Retail Center and BLD so that a Greta Wolf deal might be able to still move forward.
Great Wolf’s room taxes are projected to generate more than $3 million a year for Manteca’s distressed municipal general fund that pays for day-to-day services such as police, fire, parks, and streets.
The Manteca RDA had a balance of $76.7 million in borrowed funds as of July 1, 2010. That money is committed to numerous projects ranging from interchanges to community improvements. That amount has since been whittled down due to payments the state has demanded and other projects. The balance for the fiscal year that ended June 30, 2011 will be reflected in the final city budget for the current fiscal year expected to be adopted in early 2012. The budget was delayed due to two employee group contract negotiations not wrapped up. The RDA balance is anticipated to be less than $60 million.
Manteca had already sent $5.8 million to the state this year in RDA funds.
RDA leverages economic growth
It is money the city has used in the past to help make it possible to turn the shuttered Spreckels Sugar plan into a teeming business park that attracted $250 million in private sector investment using an outright $1 million RDA investment and an $8 million RDA loan that was repaid with interest years ahead of schedule. It is the same money that built the BLD sports complex, put in infrastructure to make the Stadium Retail Center possible and has provided hundreds upon hundreds Manteca residents with affordable housing opportunities whether it is subsidized low-income housing for seniors and families or grants to help low-income senior homeowners to make health and safety improvements to their houses.
“Redevelopment has helped stimulate the economy throughout California in ways that might not have otherwise been possible. The Legislature has now removed that investment tool, rather than make the cuts necessary to balance its own budget,” McLaughlin said.
Both the League of California Cities and the California Redevelopment Association are calling on the Legislature to convene immediately, in hopes of proposing some legislation that will revive redevelopment in some form, rather than eliminate it completely. The Legislature, in passing ABX1 27, the “pay to play” follow-up legislation, indicated it was the right thing to do because it did not eliminate redevelopment – rather, it would reduce its size. With this latter legislation struck down by the court, action would be needed by the Legislature to protect redevelopment in some form.