Santa Rosa wrapped up efforts to protect $28 million in redevelopment assets Monday, but local officials worry the cash-strapped state may still find ways to get its hands on those funds.
In a flurry of last-minute meetings Monday afternoon, city officials scrambled to lock up the assets of the city's redevelopment agency — including $13.6 million in cash and $14.5 million in real estate — in the event the Legislature passes a budget this week abolishing the agencies.
"We're here, actually, to protect the theft of our assets by the state. It's nothing more than that," City Councilman Jake Ours said.
For nearly two months, the city has been strategizing ways to keep redevelopment dollars in the community should Gov. Jerry Brown make good on threats to eliminate redevelopment agencies and use the money to shrink the state's $25 billion budget gap.
Before Monday, the city had taken steps to protect money in this year's budget that had yet to be obligated to a specific project. About $11.6 million in "funding agreements" have been struck between the city and the redevelopment agency obligating the agency to widen roads, build bike paths and replace aging sewer lines. In addition, the city fast-tracked a $2 million loan to the owners of Coddingtown Mall, which some characterized as a sweetheart deal to wealthy developers but others said would encourage private investment in the aging mall.
Then late last week, the Legislature's budget subcommittee approved Brown's spending blueprint. City officials heard the full Legislature might do likewise this week.
So on Monday the City Council, redevelopment agency and housing authority all held special meetings — with last-minute public notice — to take additional actions.
They turned their attention to protecting two other assets — the city's $6 million in loans to the redevelopment agency and $14.5 million in agency real estate.
The agency owns the former AT&T building, which is in the process of being sold to a developer planning to transform the eyesore into a mixed-use downtown high-rise called Museum on the Square. It also owns a portion of the Hyatt Vineyard Creek, which the city helped develop. The city owns the hotel's conference center and the land under the entire project in Railroad Square.
Language in the governor's draft budget released last month suggests that if redevelopment agencies are eliminated, their assets, including land, could be sold off. After being transferred to a "successor agency," those assets would be at the mercy of a seven-member oversight board. The successor agency would only have one vote, the other six being selected by the county and superintendent of education.
The language also suggested that the city's $6 million in outstanding loans to the redevelopment agency might be at risk, saying such obligations "shall be deemed extinguished and paid."
To prevent such scenarios, the City Council and redevelopment agency board voted to execute a promissory note memorializing their loan agreements, and securing them with deeds of trust on those properties. This would require the city's loan to be repaid first in the event the properties were sold. In addition, the two boards struck a side agreement that would direct the balance of the proceeds — $9 million — to the $40 million Hearn Avenue overcrossing project.