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Doubt clouds Chino project: Loss of RDA money would derail Cultural Arts Center

by Inland Valley Daily Bulletin

07-20-2011

CHINO – The potential loss of a significant amount of local redevelopment agency funds places the city’s planned downtown Cultural Arts Center project in jeopardy, officials said.
Plans call for a $13 million, 350-seat performing arts theater, art and exhibit gallery, as well as a multipurpose space for meetings, classes and community activities. The facility would be built across the street from City Hall on Central Avenue.

The project was to have used the city’s redevelopment agency funds, which are generated through property taxes.

But Sacramento’s adopted 2011-’12 fiscal budget contains measures that may shut down a city’s redevelopment agency unless city officials provide a portion of redevelopment money to the state in order to keep the agency operating.

If the City Council elects to participate in the “state extortion bill,” Chino Mayor Dennis Yates said, the Chino Redevelopment Agency will be required to pay Sacramento $5.9 million in fiscal year 2011-12 and $1.4 million each subsequent fiscal year.

“The loss of these funds will delay projects such as the Cultural Arts Center for the foreseeable future,” Yates said. “Should the City Council elect not to pay the extortion payments, the Chino RDA risks losing $19.6 million of gross tax increment revenue with Chino’s general fund absorbing a net loss of $2 million per year.”

Separately, Chino stands to lose about $300,000 from its general fund because of Senate Bill 89, a budget measure that eliminates $130 million in city vehicle license fees from all Californian cities’ coffers.

The loss of vehicle license fee revenue would bring the general fund losses to a total of $2.3 million per year, officials said.

Chino still has $20 million in reserves left after payment of a Police Department pension side fund of $4.2 million and the filling of a projected deficit of $2.8 million for the ‘11-’12 fiscal year.

If redevelopment goes away completely, Chino’s reserves would take another $2 million hit, in addition to the loss of $300,000 in vehicle license fees, leaving a reserve total of $17.7 million, officials said.

The League of California Cities, the California Redevelopment Association and two Bay Area cities filed a lawsuit Monday over the redevelopment fund measure.

“Unless overturned by the courts, this legislation will result in the elimination of redevelopment agencies and also force `ransom’ payments by local agencies to fund state obligations to schools,” according to a statement by the League of California Cities. “This will devastate many critical local job-creating revitalization projects throughout California.”

Yates recently sent a letter to Assemblywoman Norma Torres, D-Chino, and state Sen. Gloria Negrete McLeod, D-Montclair, voicing disappointment over their votes for the adopted budget plan.

“The loss of not only the Chino Redevelopment Agency but all redevelopment agencies in California will undoubtedly further impact our fragile economy and make it more difficult to adequately serve our citizens,” Yates said. “For those few cities which elect to and can afford to pay the extortion funds to keep their redevelopment agencies alive, their ability to create jobs through new projects will be severely diminished.”

Torres said that as the former mayor of Pomona, she understands Yates’ concern, but reasoned legislators were faced with “no good choices” in a tough economy.

Torres said that, had four state Republican lawmakers afforded the Democrats their votes to extend current taxes last March, “we might have been able to save redevelopment and the safety net programs important and critical to our communities.”

McLeod said, “Once Republicans failed to support any revenue, or even let the voters decide for themselves, it was impossible to make the further cuts that would have been needed to preserve the status quo for redevelopment agencies.”

Lawmakers were able to allow redevelopment agencies to continue operating “as long as they diverted some of their funds to help pay for schools,” McLeod said.

McLeod said the redevelopment package she supported would still allow, beginning next fiscal year, “redevelopment agencies to continue to collect 93 percent of their current tax increment, if they are willing to pay their proportional share of $1.7 billion for our schools this fiscal year.”

In response to SB 89, McLeod said, “Again, without Republican support for revenue, including maintaining the existing VLF rates, we had to make difficult decisions on how to fund schools and public safety programs. These were cuts we didn’t want to make.”

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