End of Redevelopment Could Jeopardize City Services

Justin Kernes, The Pioneer

Cherie Vargas
Metro Editor
February 16, 2012

Due to the recent statewide closure of redevelopment agencies, City of Hayward representatives say they are forced to find alternative funding for key economic development activities which, if not discovered, could potentially threaten city services in the long run.

The discussion should focus on how the dismantling of redevelopment agencies jeopardizes city services, because once the city is forced to rely on grants and general fund money to develop blighted and neglected areas, funds will have to be pulled from the public service sector of the city, said Hayward City Councilmember Mark Salinas.

Since the late 1970s, the Hayward Redevelopment Agency provided the city the ability to freeze the property tax base in certain redevelopment areas. As properties developed locally, a larger amount of property tax dollars remained with the city to be reinvested in redevelopment.

“For us, it was a really great tool that we [used] to keep more resources local and to be able to reinvest those in the community,” said Assistant Hayward City Manager Kelly Morariu.

The dissolution of redevelopment agencies limits the city’s ability to make necessary improvements to overlooked areas of the community.

Prior to the closure of agencies, the City of Hayward generated about $10 million per year in redevelopment property tax increment for improvement projects and historic preservation.

Although Hayward will receive a small portion of the money back as funds are redistributed through the county, Morariu said the closure could potentially cause a $1.2 million impact to the city’s general fund, which pays for police and fire departments as well as city maintenance services.

The initial proposal to eliminate redevelopment agencies came in Jan. 2011 as a part of Gov. Brown’s attempt to solve California’s fiscal crisis. After the League of California Cities filed a lawsuit against the state government in July 2011, the California Supreme Court upheld the elimination legislation in December; ruling Brown’s bill constitutional.

Although the abolishment of agencies will save the state $1.7 billion annually, several California residents believe Brown isn’t considering the bigger picture.

“Gov. Brown’s intent was to take redevelopment money and pay state obligations so they can take that money and put it somewhere else to reduce the state deficit,” said Salinas. “What he neglected to understand is how it’s going to affect local services.”

The decision to abolish over 400 redevelopment agencies statewide will affect more than the public service sector of several cities.

Several housing advocates and Hayward community members expressed concern over the impact the closure will have to affordable housing.

Prior to the dismantling, redevelopment law stated that 20 percent of all funds collected annually from tax increment through the agency were to be allocated to low-income and affordable housing initiatives.

“So basically what legislation has done is kill funding for affordable housing in the state of California,” said Morariu. “That’s going to be a huge impact that we’ll have to address.”

Morariu said the city is working diligently to find alternate funding mechanisms to continue affordable housing programs in Hayward.

“The challenge lies in us as a city to move assets from redevelopment into city ownership, said Salinas. “But how do we generate resources to continue our plans to develop neglected areas?”

Despite the many impacts on the city, Morariu said Hayward was less affected by the elimination of agencies than other cities in Alameda County, due to the city’s conservative use of redevelopment dollars.

While the City of Oakland used its redevelopment dollars on improving police services in redevelopment areas, Hayward spent the majority of funds on capital projects and investments, said Morariu.

The dissolution of Oakland’s redevelopment agency resulted in the unemployment of nearly 200 city employees, compared to Hayward’s five.

“We’re very fortunate because we don’t have to eliminate a slew of positions,” said Morariu.

Although some projects were disrupted, the Mission Corridor, Foothill and South Hayward BART Development Projects were previously purchased and will continue.

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