SLO County projects and redevelopment funds in jeopardy

July 7, 2011


Under two new state laws, San Luis Obispo County’s five redevelopment agencies stand to lose a combined $4.5 million within the next year alone and several projects may be in jeopardy—that is if the law prevails over looming legal challenges and the cities’ agencies opt-in to an alternate “pay-to-play” deal.

“It will likely require the city (Arroyo Grande) to cease all economic development efforts,” said Arroyo Grande City Manager Steve Adams.

Under the community redevelopment law ABX1 26 that went into effect last week, the state’s approximately 400 redevelopment agencies that receive $5.5 billion in taxpayer funding each year will be dissolved effective Oct. 1. The enacted legislation is a part of a budget solution for California’s multi-billion dollar deficit and a way to funnel $1.7 billion to school districts and local governments.

If a city wants to avoid total elimination of its agency it must inform the state by Nov. 1 that it will opt-in to the alternate “pay-to-play” program that would create a new redevelopment agency, authorized through the second rule ABX1 27. The catch is that it would require the agency to “voluntarily” give away a large portion of its revenue, currently earmarked to combat blight and support affordable housing, to local school districts and governments.

Redevelopment agencies are intended to revitalize deteriorated areas of towns where neighborhoods and business districts are struggling socially and economically. Agency revenues, which come from increased property taxes due to property improvements in the redevelopment zone, can be leveraged as seed money to help jump start private investment which can ultimately breathe new life into blighted areas.

The new law also sets a March 1 deadline that requires county controllers to audit the validity of each agency’s actions—a test some California cities have previously failed under the scrutiny of the State Controller’s Office.

While San Luis Obispo County’s five redevelopment agencies have not formally decided whether to opt-in to the alternate program to keep their agencies active, those cities’ officials are evaluating the options of doing so and four local agencies have solid reasons to survive.

Paso Robles

The El Paso de Robles Redevelopment Agency, which receives approximately $1.6 million in taxpayer funds per year, would be required to pay out more than $1.7 million for the 2011-2012 fiscal year under the new alternate program, according to the California Redevelopment Association (CRA).

Paso Robles officials say they have three current projects that are “critical to the city” that could be adversely affected by a total dissolution of its agency or the transfer out of revenue.

Redevelopment money is expected to fund handicapped access improvements including new curb ramps on Spring Street and in the downtown area, in addition to the construction of new fully-accessible restrooms in City Park.

“If we are not able to use redevelopment funds for these improvements, there could be significant fiscal impacts as the improvements were ordered by the court as a consequence of litigation,” said Paso Robles City Planner Ed Gallagher.

In addition, the city’s agency has reserved $1.325 million in low-moderate income housing funds to assist in the redevelopment of Oak Park Public Housing, and $270,000 to help Habitat for Humanity build five single-family homes for very low income households.

Paso Robles officials are not looking to see their agency abolished, as it is credited with catalyzing the revitalization of the city’s downtown and creating 222 affordable housing units, among other successes.

The city plans to evaluate its options over the next two months.


The Atascadero Community Redevelopment Agency, which receives more than $3 million in taxpayer funds each year, has channeled and leveraged significant sources of funds for dozens of local projects and services including the Main Street program, Sunken Gardens improvements and the new city streetscapes.

Atascadero would need to turn over more than $1.5 million for the 2011-2012 fiscal year to avoid extinction, according to CRA.

It’s a price tag that could affect Atascadero’s future improvements because redevelopment bond revenues are core to the funding for the Historic City Hall repairs. And redevelopment set-aside funds are expected to support low and very-low income housing projects.

Arroyo Grande

In Arroyo Grande, the elimination of its redevelopment agency will cost the city more than $300,000 for staffing and operational costs currently paid by the agency.

“Therefore, additional measures will need to be devised to address this increase in the general fund shortfall if the state is successful, which will likely impact other projects and services,” said Arroyo Grande City Manager Adams who also serves as the agency executive director.

Enrolling in the alternate redevelopment agency plan proposed by ABX1 27 would mean a nearly $480,000 loss of funds for 2011-2012, according to CRA, which would be siphoned out as part of the deal.

The city’s agency, which receives more than $1.1 million from taxpayers each year, will lose funding allocated for improvements to the Car Corral public parking lot in the Village, and the Police Station project. The city may also need to sacrifice its efforts to help fund affordable housing projects and marketing programs designed to attract new businesses and provide incentives for others to go “green.”

“It is disappointing that at a time of slow economic growth, the state would try to eliminate the primary economic development tool we have,” Adams said. “It is not fair that cities have to find ways to continue to provide services with dramatic decreases in our own revenues and at the same time the state is continually trying to take our revenues to address the shortfalls in their budgets.”

Grover Beach

In Grover Beach, Mayor John Shoals has been outspoken about the devastating effects the elimination of the city’s redevelopment agency would have on the coastal town where the top priority for the council has been economic development.

The Grover Beach Improvement Agency which receives an estimated $1.1 million each year in revenue would be required to turn over nearly $376,000 for the 2011-2012 fiscal year, according to CRA.

Pismo Beach

The lone exception to local opposition of the new redevelopment laws is Pismo Beach which has nearly completed its redevelopment plan for its project area and paid off all bonded debt.

The city says its initial cost benefit analysis does not justify keeping an active redevelopment agency. At the rate of around $400,000 a year its obligation under the alternate deal would leave little money for feasible improvements after taking into consideration the costs for administration and new projects.

On Sept. 6, the Pismo Beach Redevelopment Agency Board plans to decide whether or not to remain an active agency.

Constitutionality called into question

The League of California Cities and CRA are preparing to file a lawsuit challenging the constitutionality of the new redevelopment laws which is also expected to include a request for injunction, which if approved, would enable the agencies to continue operating while the case is being decided.

Meanwhile, agencies are prohibited from entering into any new agreements until the organization has enacted an ordinance committing to make the payments as required by ABX1 27.

Some local cities are joining the fight, including Arroyo Grande which has already provided a small financial pledge of support.

“We believe it clearly violates the provisions of Proposition 22, which was passed by the voters and specifically protected redevelopment,” Adams said.



  1. Bluebird says:

    The projects listed in this article for Atascadero were completed with the first round of borrowing a couple of years ago. They were in the RDA area and as stated most of the money went to improve the blighted downtown.
    For the 2nd round of borrowiing over one million was allocated for improvement at the Lake Park including the zoo, park signage, a great lawn etc. The park is not adjacent to the RDA area.
    The city attorney said if it could be determined the Park was blighted and a health and safety issue and close to the RDA area the funds could be approved. The property belongs to the city, the city pays no taxes so there will be no increased property tax benefit. After the construction work is done no additional jobs will be created. Thew zoo has always been a financial drain for the city. It was supposed to pay its own way but never came close to doing that.
    RDA’s all over Califonria have doing this same thing and they have been getting away with it because there is no watchdog agency checking on them.
    RDA’s have also failed miserbly with regard to creating low cost housing.

    (3) 3 Total Votes - 3 up - 0 down
    • easymoney says:

      Spot on bluebird.
      I used Atown because I live nearby and have watched this closely (especially in light of the many Carlton fiascos over the years) since the town was incorporated, but it is ramant in almost all communities mainly because it appears to be free money. They tend to use where they want for whatever they want..

      (2) 2 Total Votes - 2 up - 0 down
  2. OsborneCox says:

    Nicely done, easymoney. I think, obviously, we can look back now and realize what a mistake it was for Atascadero to incorporate – there simply haven’t been leaders in town capable of turning the city into anything more useful than an offramp. The garage sale mentality around here astounds me.

    (4) 4 Total Votes - 4 up - 0 down
    • easymoney says:

      Incorporation is not a bad thing if done correctly. Atown copied some of several of communities charters and followed their building codes, but no smart overall build out plans for commercial retail. Many of those communities have built wisely and logically, and their downtown corridors have retained the older character and infused those areas with private and city funds making them a destination location where you can find a very nice park with a band stand, loads of great restaurants and quality drinking establishments and a pedestrian friendly downtown where tourists and locals love to wander and spend their money. Atown took building fees and approved all forms of construction(except Walmart) in order to secure as many fees and tax dollars as possible, without looking at what this hodge podge of buildpout would do.
      Look at the number of strip malls that have had vacancies for sometimes years and the fact that no one walks in this town, they have to drive from store to store, because of the distances.
      And yes, the money spent on a few old fashioned lights or green awnings made a couple of streets look quaint, yet with out an over all plan the rest of town looks like any number of other self blighted towns on our state facing the fact that no one is coming to spend any money (locals or tourists) because there is nothing there but fast food restaurants, half empty strip malls and a mix of rundown older buildings, commercial metal buildings and isolated newer buildings all mixed together.
      Don’t get me wrong, I love Atown despite it’s warts and since it is close to where I live in the rural part of our county, it gets my money. It’s just not where we take our friends, family and visitors to spend the day doing serious shopping, eatingor recreating. And when we go on vacation we never think of Atown as a destination and I’m affraid neither do most tourists…

      (3) 3 Total Votes - 3 up - 0 down
  3. danika says:

    Atascadero spent money on “streetscapes” but not its streets. Driving on the streets of Atown is seriously questionable. Beautifying downtown when it’s mostly vacant is ridiculous. The new movie theater complex has HOW many thriving businesses in it? But the city’s salaries get paid like clockwork.

    (6) 10 Total Votes - 8 up - 2 down
  4. Disgusted says:

    So, some of the bad deals Arroyo Grande made are coming back to haunt it. They sacrificed parking for a new city hall and to accomodate a developer. And the citizens said no to a new police station, yet they continue to try and find a way, by hook or by crook. Didn’t they see the handwriting on the wall when Brown first suggested his plan?

    (5) 5 Total Votes - 5 up - 0 down
  5. Spirit Filled says:

    Atrascadero can afford to give money back, we have Walmart coming. Also if the money goes back maybe we can stop this rediculous downtown revitalization. We are never going to be a destination so relax in our mud lake that’s what I’m doing. Maybe we can advertise the mud lake as a health nut’s paradise. Heat it up a little and we have a mud sauna. Now that would be a destination almost for free. Great idea!

    (0) 12 Total Votes - 6 up - 6 down
  6. my2cents says:

    “The catch is that it would require the agency to “voluntarily” give away a large portion of its revenue, currently earmarked to combat blight and support affordable housing, to local school districts and governments.”


    Good, make them give taxpayer dollars back to our schools!! They need it.

    (5) 9 Total Votes - 7 up - 2 down
  7. Citizen says:

    This is a great time for Paso to stop the construction of a $500,000 restroom in the city park for tourists.
    It’s also time that Paso make a contribution to the schools (they have done nothing for the schools but cause problems for the last 20 years) , and withdraw their $270,000 Habitat for Humanity funding for 5 houses. It’s not worth it.

    Paso, don’t even think of trying to pass a tax for funding low income housing that is being given away to illegals (in defiance of federal law), and not to local citizens.

    (2) 16 Total Votes - 9 up - 7 down
  8. slotired says:

    IMO Governor Brown actually did the right thing by cutting unnecessary spending and direct our resources to the basic services. The redevelopment monies were not intended to create the Disneyland appearance in Arroyo Grande nor fund an elevator for their new City Hall. Further use of the monies to augment AG city fiscal shortfalls by using $300,000 for staffing and operational issues should be considered malfeasance and a conflict of interest by the City Manager who directs theCity and redevelopment agency.

    (18) 18 Total Votes - 18 up - 0 down
  9. abigchocoholic says:

    “redevelopment agencies are intended to revitalize deteriorated areas of towns where neighborhoods and business districts are struggling socially and economically. ”

    Ah, where is AG struggling socially and economically? The average house costs $350,000. Is that now the definition of struggling? How about SLO? I can’t seem to find any ghettos in SLO. Last time I looked there, the low end homes that were embarrassing to live in were about half a million.

    This isn’t about re-development, it’s about everybody holding out their tin cup. It’s a way of life in America. It’s the way our governments work.

    Time for a reality check because you people with your tin cups out are spending other people’s money.

    (22) 24 Total Votes - 23 up - 1 down
    • easymoney says:

      Ah, other peoples money. Sounds so good when you want to spend it, but never when you have to repay it.
      “Redevelopment agencies are intended to revitalize deteriorated areas of towns where neighborhoods and business districts are struggling socially and economically.”
      Redevelopment agencies were originally formed to deal with blight and run down areas of the worst parts of cities. Atascadero for example has done little to nothing of the kind, yet seems to steer the funding for use on the zoo, fancy lighting fixtures, illuminated wayfinding signs or rebuilding non earthquake standard public buildings.
      Many of these communities do not need this funding and have wasted much money and time enhancing certain key downtown locations or properties, to the ingorance of much more worthy blighted areas. Again, city managers have steered this funding into their pet projects and have left the majority of the cities to crumble. And even when individual property owners wish to build, remodel or enhance their own lands and buildings they are run through a very lengthy and costly permit and fee process, with many outrageous demands for public improvements tacked on to their projects.
      Atascadero set it’s current course of action into play decades ago when it chose to allow multiple strip malls and spread its commercial corridor over several miles while ignoring the historic downtown. Then in the late 80’s there was a movement to “enhance” the two or three blocks downtown near Traffic Way and even scripting building and signing ordinaces specifically mandating what owners could or couldn’t do with their own buildings, a little too much a little too late. Atascadero City itself will never be a destination location because of this strip mentality, yet the residential areas especially west of 101 are lovely and have many nice homes. E.G Lewis would have been proud of the private property owners yet condemned the city managers for turning his vision into a Bakersfield or Barstow…

      (7) 9 Total Votes - 8 up - 1 down

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