agenda city of watsonville city council/redevelopment agency meeting

Pending Threat- Redevelopment Agency (RDA). In addition to the cuts and layoffs
summarized within the General Fund, the City faces the likely potential of more General Fund
reductions by the State eliminating or depleting the City’s RDA. The State Governor continued to
propose in his May Revise Budget Report that the State’s legislature should eliminate all
Redevelopment Agencies to provide a projected $1.7 Billion towards the State’s $9.6 Billion
deficit. The State Controller has added considerable pressure by stating he will stop paying State
Legislator’s for each day they don’t adopt a balanced State Budget after June 15, 2011.
There have been several bills presented in the State legislature that will either eliminate the RDA
or put very strong limitations on how RDA funds could be used. Staff feels that even if RDA’s are
not eliminated, it is highly likely their cash and revenue streams will be diverted to the State. In
2009, all the State RDA’s were mandated to remit over 2-years a total of $1.7 Billion (the same
amount demanded now). From those 2009 actions, the City lost a combined $3.1 Million that
would have otherwise been used for economic development and other projects.
The General Fund could lose an additional $395,469 in cost allocations and specialized services
for the RDA project area and the City could lose $1,090,684 in RDA operations (including the
$395,469) and several million annually in available project resources. Exhibit 8 below lists the
potential losses to the General Fund ($395,469) and the operating costs of the RDA that are in
jeopardy from State action.
Redevelopment Agency Operations
Exhibit 8
Amount
Staffing $ 338,615
Operations 752,069
Direct RDA 2011-2012 Budget $ 1,090,684
General Fund support (subset of operations)
Amount
Code Enforcement & Planning $ 79,365
Downtown Promotions & Events 44,473
Specific Financial Accounting & Reporting 41,085
Cost allocation/Overhead 230,546
Total FY 2011-2012 GF Allocation $ 395,469
In addition to the costs in Exhibit 8, the RDA’s elimination would also eliminate the RDA’s
Affordable and Low-Income housing programs. The State is likely to transfer control of affordable
housing decisions to a joint county-wide agency (like the Santa Cruz County Housing Authority).
Staff have prepared several alternative reduction scenarios and will present those to Council if
the State of California passes legislation to eliminate or deplete the RDA’s resources.
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