Court decision will have slight impact on development projects

SOLANA BEACH — A Dec. 29 ruling by the California Supreme Court that upheld a state decision to abolish redevelopment agencies will negatively impact at least one planned project in Solana Beach but overall is not expected to have a significant effect on some other potential developments, City Manager David Ott said.
Redevelopment money is “a significant financial resource” for planned improvements at La Colonia Park and Community Center, Ott said.

“That is definitely in jeopardy,” he said.

In September 2010, council members authorized staff to move forward to send plans for the $5.5 million project to the California Coastal Commission for approval.

But Coastal Commission permits are only valid for two years so city officials must decide whether to go ahead with those plans without a major funding source right now, Ott said.

Redevelopment agencies, or RDAs, allow cities to use part of their property tax revenue — money that would otherwise go to state coffers — to improve areas that have been deemed blighted.

Gov. Jerry Brown sought to eliminate the agencies to help balance the state budget. The agencies sued the state hoping to overturn two laws passed last year and the case went to the Supreme Court.

Based on last month’s ruling, all agencies must be dissolved by Feb. 1.

Redevelopment areas in Solana Beach include the Highway 101 commercial corridor north of Dahlia Avenue and the Eden Gardens neighborhood.

The city used $62,000 from its redevelopment plan, adopted in 2004, for the recent renovation of Fletcher Cove Community Center.

In addition to the La Colonia improvements, other significant proposed projects include redevelopment along Coast Highway 101 and a mixed-use development at the train station.

“The 101 improvements are mainly being funded by a percentage of future TransNet (money) so (the decision) will affect that a little bit but not enough to make a huge impact,” Ott said.

He also said he didn’t expect the elimination of the agency to play a significant role in the train station project, which the city is hoping to develop through a partnership with North County Transit District.

State law required RDAs to deposit 20 percent of their tax increment revenues into low- and moderate-income housing funds.

The recent decision should have little if any impact on The Pearl, a proposed affordable housing complex currently being discussed for a city-owned parking lot on South Sierra Avenue, as any city money for that project will come from funds set aside years ago based on a court settlement, Ott said.

But because RDA money was a “significant funding mechanism to provide affordable housing,” abolishing the agencies is expected to have a major impact on the city’s ability to provide that in the future, he said.

Redevelopment began in 1945 as a post-war blight removal program that used federal urban-renewal grants to clean up blighted urban areas. In 1966 there were only 27 projects in the state and most ranged from 10 to 100 acres.

With the use of tax-increment financing authorized by voters in 1952 and fiscal restrictions imposed on local governments by Proposition 13, redevelopment has become a key local financing tool.

There are now about 400 RDAs statewide and many encompass thousands of acres.

City Council was slated to discuss option at the Jan. 11 meeting.