Long Beach Press Telegram

A lesson for the City Council on redevelopment

Saturday, November 13, 2004 - The proposal for the Long Beach City Council to assume the duties of the Redevelopment Agency board requires not only careful consideration of what such a move would entail, but also an understanding on the part of the council of the over-all process of redevelopment, including the way tax increment dollars can be spent.

Does the City Council understand that:

— Parts of the city not included in a redevelopment project area continue to receive 100 percent of the city's share of property tax dollars generated by their properties? That money goes into the general fund to pay for services in those areas.

— Redevelopment dollars cannot be made available for improvements outside redevelopment project areas.

— The 20 per cent housing set-aside dollars (used for the creation of affordable housing) can be spent anywhere in the city.

— Restrictions on the use of tax increment dollars is spelled out in state redevelopment law.

— Redevelopment activity is governed by state law.

Does the City Council understand that of the approximately $60 million annual budget for redevelopment in Long Beach:

— Twenty percent must be set aside for affordable housing.

— An additional sum of approximately 20 percent goes to mandatory pass-through payments to various taxing agencies, e.g. the city, the county, schools, etc.

— Out of what is left, ERAF (Educational Restoration and Augmentation Funds) payments must be made. After those dollars are deducted, staff salaries and benefits are deducted.

— A certain amount must be reserved for payment of debt service on existing bonded indebtedness. Tax increment increases from one year to the next; more will be available a year from now than is currently available.

— The more tax increment dollars that are spent for salaries and additional staff, the less there is to do improvement projects in the neighborhoods and on the business corridors.

The bottom line is that less than half of the overall budget is available for projects to remove blight. Removing blight is the real purpose of redevelopment.

Does the City Council understand the real purpose of the independent study?

The independent study will examine methods used in previous projects in this city and will point out what has worked and what has failed. It will examine cities all over this nation to determine what are the best (most successful) practices being used in redevelopment.

— The study will examine the appropriate relationships between all stakeholders (the public, staff, RDA board, City Council) in the redevelopment process. It will make recommendations as to the best configuration for redevelopment in this city: Is merger appropriate?

— The independent study will make recommendations regarding steps necessary to improve redevelopment in Long Beach.

How much, if any, of the forgoing does the City Council understand? Or does the City Council only understand that there are redevelopment tax increment dollars out there that they want to control? Money that can be mismanaged just as they have allowed the city's general fund dollars to be mismanaged.