City faces tough Redevelopment choice
CITY MANAGER LINDA KELLY
New redevelopment legislation signed by Gov. Jerry Brown last week means Sonoma faces a "lose-lose" proposition, said Sonoma City Manager Linda Kelly on Friday.
But because the two bills that drastically changed current redevelopment law are still open to interpretation, Kelly said the full impact is still unclear.
Following the passage of the bills - ABx1 26 and ABx1 27 - the Sonoma Community Development Agency is under threat of elimination, said Kelly. By Oct. 1, the City will need to decide to "opt in or opt out" to retain its redevelopment agency authority. Opting out dissolves the agency, with potential loss of all tax increment funding except for bond payments and payments under enforceable obligations. The definition of "enforceable obligations" remains unclear and Kelly said a conference call with redevelopment attorneys is scheduled for later this week. Opting in retains the agency but requires the CDA to make a significant annual payment to the state, currently estimated for Fiscal Year 2011-12 at $1,793,445.
"Until the city opts in, or until the legality of this redevelopment legislation is decided by the courts, the Sonoma Community Development Agency is not open for new business," said Kelly. "We cannot at this point in time provide any economic development loans, façade improvement grants to local businesses, or enter into any contracts or agreements for new programs," Kelly added.
Plans to sell the old Patten Street fire station will have to be put on hold, Kelly said, although the existing agreement for an affordable housing complex on Sonoma Highway, financed with CDA bond money, should be able to proceed. The status of redevelopment funds for the Sonoma Valley Library renovation was unclear at press time.
The city sold some $15.6 million in redevelopment bonds earlier this year, but Kelly said it isn't clear what the new law will require to be done with the proceeds.
"We are attempting to understand that right now," she said. "It's going to depend on some interpretation of the law."
Until Oct. 1, (the date upon which the CDA must dissolve unless it opts to continue to exist) the agency may make scheduled payments on existing bonds, contracts for administration or operation of the agency, and perform obligations on "any legally binding and enforceable agreement or contract that is not otherwise void as violating the debt limit or public policy," according to the language in the bills.
ABx1 27 allows redevelopment agencies to avoid dissolution by opting into an "alternative voluntary redevelopment program," which requires the annual payments to the state.
To avoid dissolution, the city must enact an ordinance by Nov. 1 in which it agrees to comply with the voluntary program by making the payments. Once the ordinance is enacted, the CDA may immediately recommence normal redevelopment activities and enter into new contracts.
The one piece of good news is that Gov. Jerry Brown signed legislation to enact a realignment of the way vehicle license fees are allocated that will preserve the COPS grant funding program that provides the city $100,000 to pay for the Community Services Officer program. The bad news is that the realignment will cost the city $35,709 from its share of vehicle license fee revenue.