RIPON – The Ripon City Council has a few weeks to decide the future of the redevelopment agency.
Keeping it – Ripon could create its own RDA – will at least ensure the expansion at the Mistlin Sports Complex thanks to the recently approved $3.3 million in bond revenue for the baseball/softball fields.
Eliminating the RDA could result in additional general fund property tax revenues for the city.
Under state Assembly Bill No. 26 – known as the “dissolution bill” – the local redevelopment agency would be dissolved as of Oct. 1 unless elected officials opt for the “continuation bill” or AB No. 27, according to director of planning Ken Zuidervaart, who provided the information-only presentation at last Tuesday’s City Council session.
The legislation was part of a plan to plug holes in the state budget. The state’s action is being challenged in court with a decision expected by the end of December.
Council members, who took no action, will meet again on Tuesday, Sept. 20.
“Redevelopment agencies may choose to continue operation as long as they make ‘voluntary’ payment – termed ransom payments – on a yearly basis to the County Auditor / Controller to be redistributed (in accordance to AB 27),” Zuidervaart said in his staff report.
AB 26 and AB 27 came as part of the state-approved budget back in June, stirring controversy across California; in particular, both bills violate provisions in Proposition 22 passed November 2010. Both bills are being challenged with the state Supreme Court expected to make a decision on Jan. 15, 2012.
The Council, as for now, heard several key points on keeping the RDA going, including:
• Operating in a negative cash flow for the next 11 years or so for regular redevelopment funds. Excluded is low-moderate redevelopment money. One way to offset these losses could be the redevelopment bond proceeds or money from the general fund.
• Recouping those losses in about 22 years, with the RDA earning about $2.1 million in today’s dollars at the end of the time limit at the end of the time limit to receive tax increment funds.
• Getting an estimated $26 million in low-mod housing set aside funds, thus, continuing the affordable housing projects. However, this requirement would not exist if redevelopment was no longer in place.
According to the redevelopment plan, the life of the plan for the original project area – established in 1983 – runs through 2026, with the added territory area going through 2028.
“What this means is that projects are no longer allowed to be done after this date unless the plan is amended to extend the plan life,” Zuidervaart said.
As for his key points if Council chooses to dissolve the agency:
• The City could receive about $120,000 per year – or $3.8 million total – in property tax revenue into the general fund over the life of the plan and through the end of the tax increment collection period in 2043.
• Over the life of the plan (2026) and the current loan terms for low-mod loans (2056), the City could receive, best case scenario, an estimated $1.2 million based on the RDA’s current assets.
• AB 26 provides an allowance for administrative costs of the successor agencies – or $250,000, in this case, for the City of Ripon for the 2011-12 fiscal year. According to the bill, the same amount could be provided to the successor agency for each fiscal year thereafter. Zuidervaart indicated that there’s been some debate and confusion over if the $250,000 will be ongoing or only for one or several years.
AB 26 would also abolish the concept of tax increment. Upon dissolution, Zuidervaart said, the tax increment revenues that would have been allocated to the RDA, instead, would be treated as general property tax revenue.