Some Redevelopment funds may return to city via state legislation passed late in 2015

But according to recent legislation, (SB 107) passed by legislators and signed by Brown in September, many California cities may see some of that money come back to their communities. The Lemoore City Council, on Tuesday, will hear a report from its finance department that basically states that Senate Bill 107 will allow Lemoore’s Successor Agency – the body created to manage the Redevelopment turnover – to “utilize from 5 to 35 percent of the bond proceeds in a manner consistent with the original bond covenants.”

Prior to the dissolution of the Lemoore Redevelopment Agency in 2011, and confirmed by a California Supreme Court decision in 2012, the Lemoore RDA issued $19,150,000 in Tax Allocation Bonds. Those proceeds have been held because the State Department of Finance said the money could not be used on Lemoore projects.

Lemoore, if it adheres to Department of Finance requirements, one of which includes having Lemoore’s Successor Agency seek the state’s final approval for a Final Recognized Obligation Payment Schedule (ROPS), it could seek up to 35 percent of the bond proceeds to be used on local projects.

According to city estimates, the city could get up to $4.65 million for city projects and another $1.16 million for low and moderate income projects. Original requirements for RDA projects included a set aside of RDA funds for low and moderate income projects, a move designed to increase affordable housing in California.

Redevelopment agencies essentially gave local governments – usually cities, but sometimes counties – the ability to capture a greater share of property taxes. After an area was declared a redevelopment project area, the share of property taxes that goes to schools and other local agencies was frozen. All of the growth in property taxes from that point until the redevelopment project area expired – usually 50 years – went back to the redevelopment agency.

Because of the increased flow of tax revenue into the RDA, Lemoore was able to use bond financing, using the funds to improve the city’s “blighted” areas, all of which were included in a Redevelopment area, identified by city officials as areas in need of development.

While city leaders haven’t identified specific projects, any funding could be used to expand the city’s waste water improvement capabilities, make street improvements, fund the police department’s proposed dispatch center, road widening and much more.

Brown’s move in 2011 came as somewhat of a shock to local communities. He argued at the time that the state could no longer afford redevelopment in a budget crisis. Redevelopment is contentious because of the financial advantage it provides redevelopment agencies and their community sponsors, primarily cities, over school districts, counties and other property tax recipients. Brown argued that the money would be better spent directly on schools and core city and county services, such as police and fire protection.

There also have been examples of abuse and questions raised about how some redevelopment agencies have used RDA funding to combat blight. Instead, there were arguments that some communities used the power of eminent domain and other questionable RDA activities to improve sales and property tax figures in their cities by appealing to developers and other special interests.

By ending redevelopment agencies, the state had effectively seized control of billions of dollars of property taxes previously controlled by the cities that established redevelopment agencies.