With two rulings by the California State Supreme Court Thursday morning, millions of Redevelopment dollars that go to support Arcadia business, development, low-income housing, as well as the jobs and salaries of local workers and the budgets of community organizations, have been put in imminent jeopardy.
Among the potential hit list: • the Gold Line overall and Arcadia enhancements planned for the train station • housing for seniors and low-to-moderate income residents • redevelopment of Downtown Arcadia • expansion of Rusnak Mercedes or any development of related buildings purchased by City • more than 10% of the annual budget of the Arcadia Chamber of Commerce • planned enhancements to freeway off-ramps and other local road projects • City marketing support for this fall’s Breeders’ Cup at Santa Anita • 10% – 100% of the salaries of multiple high-ranking City managers and department heads
Late Thursday afternoon the City of Arcadia hastily scheduled a study session for 6 p.m. Tuesday, Jan. 3, preceding the first City Council meeting of the year, to discuss implications of Thursday’s ruling that upheld Governor Jerry Brown’s decision to eliminate the state’s authorization of redevelopment agencies, first adopted 66 years ago in 1945, and its funding of about 400 community Redevelopment Agencies across the state. Arcadia adopted a Redevelopment Agency for the city in 1973. The state Supreme Court landed a second blow when it disallowed the state’s offer to have cities like Arcadia pay a “ransom” from city property taxes to keep the money coming. Arcadia City Council already agreed to pay about $1.5 million in ransom.
Redevelopment agencies permit cities and counties to identify areas in need of improvement/support and receive state funding to partner with private developers and/or use a portion of property taxes to help pay for those improvements, projects, and entities.
Arcadia has benefited from the use of about $4 million per year in redevelopment monies, most of which — $2.6 million at present – is committed to bond payments, which City Manager Don Penman told ArcadiaBest.com he believes the state will be legally obliged to continue funding.
The other $1.4 million has been used to support the development of everything from the new Campus Commons senior apartments on Campus Drive near Arcadia High School (20% of Redevelopment funding is mandated for use on such projects) to plans for a transit center retail and open area at the Gold Line train station on First Avenue at Santa Clara Street. Of broader impact, Thursday’s ruling struck a serious blow to the entire Gold Line project from Pasadena to Azusa, with the critical mandated maintenance and operations facility in Monrovia owned entirely by the Monrovia Redevelopment Agency. Gold Line officials say they will “review (their) options.” (It was one of two blows to the Gold Line Thursday, the other from a different court judge who threw out the Supplemental Environmental Impact Report that would have allowed the Monrovia facility to be used for the Gold Line. Officials will challenge that ruling and hope for a reversal.)
In trying to accommodate the desire of Arcadia’s only auto dealership and biggest single sales tax generator, Rusnak Mercedes, to expand their showroom and car lot, Arcadia has leveraged Redevelopment monies to purchase four parcels of land on Huntington Drive and Santa Anita Avenue. Although Rusnak is once again threatening to leave Arcadia unless the City ponies up another $3 million in incentives to cover $1 mil. in lost annual onuses from Mercedes for the past three years, Arcadia had hoped to use Redevelopment money to attract new businesses to the buildings that have been vacated.
Much of the $1.4 million is doled out in smaller increments of tens of thousands of dollars to support many local projects and entities. All of it could be cut off immediately as a result of the ruling, though Penman expects lawmakers to take another stab at finding an alternate solution. “I don’t think most legislators want to see Redevelopment Agencies go away,” Penman said. Governor Brown proposed the concept earlier this year as part of his solution to cover the state’s massive debt. Officials estimate that the state could save and reallocate $1.7 billion by ending the funding of Redevelopment Agencies.
Nonetheless, Arcadia will need to take some sort of action in January.
Redevelopment money was responsible for the creation of Old Pasadena and San Diego’s Gaslamp Quarter. Merchants in the Downtown Arcadia area along First Avenue and Huntington Drive have spent the past year laying plans to create a legal business district in early 2012 that would work to revitalize Downtown Arcadia into something akin to Old Monrovia on Myrtle Avenue. The Arcadia City Council previously approved $20,000 in Redevelopment money to pay for a consultant to help the merchants explore the project and recently tentatively approved additional Redevelopment Agency funding to create the Business District. That plan is now in limbo as the result of Thursday’s ruling.
Also up in the air is the ongoing employment of the people in the City’s development department since cutting off state Redevelopment funding would drastically cut the City’s ability to finance any development. That includes Economic Development Manager Jerry Schwartz, whose entire salary is paid by Redevelopment funds. Nearly half of the salary of Assistant City Manager Jason Kruckeberg is covered by Redevelopment money, and about 10% of City Manager Penman, who is retiring in 2012 as soon as a new City Manager is hired.
The City also funds more than 20% of the $300,000 annual budget of the Arcadia Chamber of Commerce, 50% of which ($31,000, or nearly the entire annual pay for two of the four staff members), comes from Redevelopment funds.
In 2008 and 2009, the City spent $25,000 in Redevelopment money to promote and market the Breeders’ Cup at Santa Anita with street banners and a web site, among many other promotional efforts. The Breeders’ Cup returns to Santa Anita this fall but Penman said no City money would be available this time as a result of Thursday’s ruling.
Short of a last-ditch effort by legislators to create an alternate source of funding for Redevelopment Agencies, the City’s only options are to shift already constricted General Funds to cover Redevelopment expense items, or eliminate projects and positions.
— By Scott Hettrick (This article does not reflect any official position or the opinions of anyone at The Arcadia Chamber of Commerce, where Hettrick is Executive Director.)