The city of Chula Vista volunteered to pay the state millions this week in order to continue its current redevelopment programs and projects.
At the Chula Vista City Council meeting Tuesday, council members unanimously approved an ordinance to participate in an alternative voluntary redevelopment program as a way to keep redevelopment alive in the city.
In the last five months, there has been significant discussion regarding the existence of redevelopment agencies across the state.
The elimination of redevelopment agencies would redirect the tax increment back to the state and school districts, county offices of education, charter schools and community colleges as a way to balance the state’s budget.
Chula Vista city staff estimated the initial payment for the 2011-12 fiscal year at $4.1 million, including approximately $1.3 million from the redevelopment agency tax increment revenue and $2.8 million from the low-mod housing fund.
This is approximately 29 percent of the estimated fiscal year’s tax increment revenue.
Assembly Bill X126 allows an oversight committee to review any agency actions taken after Jan. 1, 2012, and would be allowed to cancel previous actions of redevelopment activities at their discretion.
While the agency is suspended, there would be no new debt allowed and the city would take on more of a caretaker role.
During the winding down process, the city would act as a steward for taxing agencies.
On Oct. 1, all agency powers will be suspended and the redevelopment agency will be dissolved if the city does not decide to opt in; however, if the city does take advantage of ABX127, the city will be able to continue redevelopment as it always had.
“It’s difficult because we don’t have a lot of choices,” Councilman Steve Castaneda said. “We have two … and neither one is good.”
Dissolving redevelopment agencies would affect current redevelopment projects including public improvements for the Bayfront Master Plan, Third Avenue Streetscape Master Plan and Main Street Streetscape Master Plan either severely reduced or eliminated.
In addition, ABX126 would severely impact the future development of affordable housing in Chula Vista.
On Tuesday, Susan Tinsky, executive director for the San Diego Housing Federation, asked council members to adopt a timeline to pay back the low-mod funds.
“In light of the enormous affordable housing needs facing the city, we cannot afford to lose further revenues to provide affordable homes to the city’s residents.
Tinsky also asked City Council members Tuesday night to make a commitment to repaying the “borrowed” low-mod funds within three years or as soon as is feasible.
“This will ensure that the city of Chula Vista will be able to continue pursuing additional affordable housing options,” she said.
Chula Vista Mayor Cheryl Cox said she wouldn’t feel comfortable making any promises.
“We don’t know what the state’s going to continue taking from us,” she said. “I’m very concerned that setting a timeline for repayment would be an artificial one.”
Castaneda said he thinks that low-mod funds will help the city deal with some of its issues.
“I think we do need to look at a way to have it (low-mod funds) be paid back,” he said. “Maybe not a
hard and fast way … the only money we’ve spent has been affordable housing money.”
A 15-fiscal year projection with a 1 percent increase annually in tax increment shows that eliminating redevelopment would give the city $16.8 million and $6.5 million to continue with redevelopment.
It also shows that opting in would provide $157.8 million to the redevelopment agency and $42.2 million to the low-mod housing fund.
In June, Gov. Jerry Brown signed two related redevelopment bills, ABX126, which dissolves redevelopment agencies and ABX127, which uses an alternative redevelopment program to keep it going.