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Folsom fights for redevelopment agency

By February 7, 2011

FOLSOM — The Folsom City Council members didn’t like having to do it, but at a special joint meeting of the City Council and redevelopment agency on Feb. 1, they agreed to take steps to protect the city’s redevelopment funds from poaching by the state of California. In doing so, they joined many other California cities taking the same action.

“We’ve always played by the rules,” said City Council member and agency director Kerri Howell, referring to previous raids on city, county and special district reserve funds by the state to balance the state budget. The jurisdictions that had operated in a financially prudent manner were the hardest hit.

“This has happened before,” echoed Folsom mayor/redevelopment chair Andy Morin. “We feel somewhat violated.”

“This isn’t about trying to circumvent the state,” said City Manager Kerry Miller, “but the voters approved Proposition 22 last year.” (In the 2010 General Election, Proposition 22 was approved by 61 percent. The official summary for the proposition said it “prohibits the state, even during a period of severe financial hardship, from delaying the distribution of tax revenues for transportation, redevelopment or local government projects and services.”)

The council members/agency directors asked their redevelopment agency financial advisor, Mark Northcross, from Northcross, Hill and Ach, “Can the state do this to us?” Northcross turned to the front row of the audience and introduced Nicki Murphy, a redevelopment attorney, whom he had brought in case legal questions arose during the meeting. Murphy shrugged her shoulders and shook her head, saying, “We don’t know yet. They’re sure going to try.”

In his Jan. 31 State of the State speech, Gov. Jerry Brown challenged the cities and counties to come up with an alternate source of funding to replace his proposed appropriation of $1.7 billion in California’s redevelopment revenues to plug a $25 billion hole in the state General Fund.

One of the arguments on Gov. Brown’s side is that of the 400 redevelopment agencies in California, a few of them have abused their powers. Howell mentioned that some Folsom residents have told her they are concerned when they hear the term “land acquisition,” equating that with eminent domain, a process in which a jurisdiction takes property from an unwilling seller “for the public good.” Howell said, “Folsom never has, never will, use eminent domain for redevelopment.” She went on to clarify that in Folsom the term land acquisition refers to such opportunities as the city acquiring Folsom Cordova Unified School District’s office on Riley and E. Bidwell streets when the school district moves to its new quarters.

In defense of redevelopment, Miller said, “No program has had a more positive impact on public safety than redevelopment. LA’s downtown was an undesirable, unsafe place to be until it was redeveloped. Now it is an attraction, and is saving public safety dollars. The same can be said for San Francisco, San Diego and Oakland.

“It’s critically important that redevelopment projects in the ground that need additional funding be maintained. That money only comes from redevelopment funding. We need to preserve the integrity of the city’s obligations,” Miller said.

City council member/redevelopment director Steve Miklos said, “This is absurd to have taxpayer projects in jeopardy because they (governor and legislators) can’t keep their house in order, and added somewhat in jest, “Maybe we need to form the Republic of Folsom.”

Assistant City Manager Evert Palmer added, “In times of uncertainty, local dollars should be spent locally.”

The highest profile redevelopment project in Folsom is the Sutter Street Revitalization. That was separated into two phases, with phase one being completed this spring or summer. However, the Folsom Redevelopment Agency completed several projects in the past few years plus it has added affordable housing to the city through the agency.

Palmer highlighted several projects:

• 25,000-square-foot mixed use project in Folsom Historic District

• Ongoing revitalization of historic downtown Folsom

• 315-space public parking garage in the Historic District

• 138-unit Mercy senior low-income rental housing project

• 80-unit Mercy Village Folsom low- and very low-income rental housing project

• New library and adjacent recreational facilities

• Down payment housing assistance program

• Two light rail stations

Potential project opportunities and cost estimates are:

• Historic District Revitalization, Phase 2                        $   5 million

• Historic Folsom Station, Phase 2                                         700,000

• Central Business District Revitalization                           10 million

• Riley and Leidesdorff streets improvements                             4 million

• Natoma/Coloma intersection (Four Corners)                 2 million

• Dan Russell arena improvements for multi-use                 1 million

• Wye property improvements                                                     1 million

• Historic District road improvements                                         1 million

• Second parking structure in Historic District                 1 million

• Affordable housing                                                                 5 million

• Housing rehabilitation                                                     2 million

Howell pointed out that the total of potential projects exceeds the current bond capacity, and referred to the list as a “landscape of projects.”

Gov. Brown proposes to eliminate all redevelopment agencies as of July 1. A “successor agency” would take over all administrative functions, including administering the bonds that are outstanding.

Folsom has three outstanding bonds.

All assets of the agencies will be seized by the state and sold, with sale proceeds going to the state. A question arose at the meeting whether the term “assets” refers to real property. Again, the question came up: Can the state really do that?

To replace the lost redevelopment money, Gov. Brown suggests cities and counties have a vote of their citizens to raise property taxes. Folsom’s City Council/agency directors were skeptical of that solution.

Redevelopment financial advisor Northcross said that draft legislation to eliminate redevelopment agencies is scheduled to be signed on March 4. No new debt or other obligations will be possible after that date.

Northcross presented four options for action, including “do nothing and see what happens.” The other three were variations on direct loans or selling bonds to commit agency funds to city projects before March 4.

Northcross said the benefits to the city of taking action would be retaining between $7.6 million and $14.5 million for planned projects and between $7.8 million and $10.8 million for planned affordable housing projects.

From the menu of options, the council members/agency directors chose to apply for a direct loan from JP Morgan Chase for housing set-aside funds and to prepare for the sale of a taxable bond sale for redevelopment projects.

Four of the members attended the special meeting; Jeff Starsky was absent.

At its regular meeting on Feb. 8, the Folsom City Council will convene as the Folsom Redevelopment Agency to take action on the Historic Folsom State Project and reconvene as the joint Folsom City Council/Redevelopment Agency to take action on three affordable housing projects.

Roberta Long


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