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Redevelopment may be costly Allison K. Sampite | Sun, Jul 24 2011 12:00 PM

The National City City Council voted Tuesday to participate in a voluntary program to help keep redevelopment alive in the city.

But it won’t be cheap—the initial payment is approximately $4.8 million for the first fiscal year. After which an ongoing annual payment of approximately $1.1 million is owed to the state.

The money is required under state laws passed in June if cities voluntarily decide to keep redevelopment agencies. However, if they vote to disband the agencies, redevelopment funds would go back to the city, county and schools.

Next year half of the $4.8 million is due Jan. 15 and the other half is due May 15.

The payment to the state means that redevelopment can exist as it always did and will continue to keep a number of projects and programs going such as blight control, code enforcement and affordable housing.

“It allows us to take local dollars and reinvest in project areas that have infrastructure and housing needs to improve the quality of life,” City Manager Chris Zapata said. “Without the action the council took, sales tax
monies would go away and permanent and part time jobs would be threatened or jeopardized.”

“The opportunity to replace and expand quality of life for our residents is lost unless economic development continues,” Zapata said.

The $4.8 million is coming from three different sources, including 20 percent or $2.5 million from affordable housing funds, and the remainder from tax increment funds and leftover bond proceed money.

The ordinance will be placed on the Aug. 2 agenda for a second reading and adoption. Meanwhile, California cities filed a lawsuit Monday against the state to overturn two bills passed in June.

The League of California Cities and the California Redevelopment Association took the legal action. National City is in support of the suit.

Had the city decided to dissolve the agency, all fund balances including debt would be turned over to a successor agency beginning Oct. 1.

“It’s unclear as to what the new obligations for use of proceeds of bonds would be,” City Redevelopment Director Brad Raulston said. “Essentially, the agency would keep its legal obligations and the operations would begin winding down.”

Current projects and programs that would suffer in National City if redevelopment was dissolved, include west side development, which focuses on affordable housing, the Paradise Creek and park improvement, Lowe’s big box project Drive Inn Site, Eighth Street corridor and the aquatic center.

Legislation ABX127 allows the city to continue the operation of a redevelopment agency.

ABX126 severely limits the action that can be taken by the agency,” Silva said. “It dissolves that ability by October 1.”

“In one year, that money could do a lot in our community,” Councilwoman Alejandra Sotelo-Solis said. “It’s unfortunate that if we cannot pay this, the alternative is to discontinue the program.”

National City Mayor Ron Morrison compared the state’s elimination of redevelopment to the wild and crazy duo Bonnie and Clyde.

“We have … a thug and deception mentality going on at the state level,” Morrison said. “The state is saying we have the right to do this whether it’s legal or not.”

“We’ve had to say ‘no’ to our friends and special interest groups because we don’t have enough money,” Morrison said.

“All the state is doing is finding more ways to get a hold of other people’s money.”

No one seems to know what’s happening, especially at the state level, Morrison said. “The city has taken their turn at the bat. It needs to be done in Sacramento also.”

In other city council news, an agreement was made with the Municipal Employees Association and the city for terms on a three-year contract.

Some 120 city workers, including public works employees, clerical staff and maintenance workers agreed to pay five percent more toward their pension contributions.

This will save the city around $267,000 for the 2011-12 fiscal year.

“It’s great to reach that agreement so quickly and it’s a big deal for the employees to contribute— they are setting an example for the other unions,”Sotelo-Solis said.

“This has been with a great sense of compromise,” Morrison said. “…When you look at what was given up it’s phenomenal.”

National City currently has just over 300 employees, who continue to take on more responsibility due to budget cuts.

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