When Mark Purdy starts writing about the state of redevelopment, you know it’s serious.
The truth is, whether by design or accident, Selig has dawdled so much that any Northern California ballpark plan could be imperiled by new Gov. Jerry Brown’s plan for the state to scarf up redevelopment funds. Oakland was counting on those funds to buy ballpark property. Fortunately, San Jose has already purchased most of its land and has a Plan B to obtain the rest — selling other downtown parcels owned by the city and using that money to buy up the remaining ballpark footprint.
Following up on former San Jose Mayor Tom McEnery’s appearance on The Ronn Owens Show, Purdy is taking the tack of calling Bill Neukom’s stance on T-rights silly, as opposed to McEnery’s appeal to Neukom’s better angels. Again, I can’t see this media campaign as being effective other than the fact that the issue remains in public view, which may be the point.
Going back to redevelopment, an article in today’s Merc tries to project what would happen in the near term to the beleaguered SJRA. The agency has tax increment over 8,100 acres of property in SJ city limits, equivalent to a 12 square miles or a city the size of Mountain View. Even if Sacramento ordered SJRA to stop any new development contracts tomorrow, they couldn’t claim any new tax increment off the top because it’s already sworn to pay off debt for existing projects. That’s because nothing new is being built in San Jose other than a few projects which started a few years ago such as the Brocade headquarters in North San Jose. For Sacramento to be able to get “new unsecured” tax increment, San Jose and other cities would have to embark on a new development boom, or at least encounter a situation where a bunch of property gets sold among private parties. That means that, ironically, one of the ways Brown could see that new tax increment is if he allows the RDAs to make their last hurrahs and go out with a bang by approving new projects, like a Diridon ballpark. Diridon would be a different case from most other new projects in that no new funding source would be required to complete the project.
That’s not a situation that would work in Oakland, since ORA would have borrow against future tax increment to assemble the Victory Court land and infrastructure. That’s exactly what Brown wants to prevent. Oakland could raise funds without ORA, but it would have to occur via a hike in sales tax or a parcel tax, the same kind used for local school improvements, and thus would require a vote. Should the dissolution or scaling back of RDAs happen – say by this summer – the biggest obstacle facing San Jose would also face Oakland, except that Oakland would require a supermajority (2/3rds approval) 55% approval per Brown’s proposal for limited redevelopment, whereas San Jose would require only a simple majority (no new taxes). Judging by the results of the last vote on a parcel tax measure in Oakland (for police funding), it’s not very promising.
Even if the cuts were quick, there’s no chance that they’d be clean. The Bay Citizen’s Zusha Elinson ponts out that both Oakland and San Jose have a lot of budget crossover between RDA and City, with both cities paying for some police task forces and even city council members’ salaries. When Controller John Chiang finishes his audit of 18 cities (including SJ), he may find that whatever revenue Governor Brown thought he could realize by killing RDAs was a mere illusion. Then what?
Then there’s the issue of what tool Brown would use to extract funds. He promised not to go after already under contract projects. He might go after recently agreed upon projects, the ones cities have been rushing to approve over the last few years weeks. This goes against the spirit of Proposition 22 which was passed in November. Brown and his aides talked of Prop 22, which is now enshrined as a constitutional amendment, being moot if the agencies themselves were eliminated. But that would undoubtedly run into lawsuits and scared the big city mayors enough to lobby Brown in the Capitol last Wednesday. The result of the meeting was that the mayors, including Chuck Reed and Jean Quan among others, agreed to put together a “working group” whose mission it is to make a counterproposal. Given our experience with panels/committees/working groups, the mayors aren’t the best bet right now.
A compromise solution may come from the legislature. Assemblyman Jim Beall suggests that the state could place a cap on the percentage of tax increment any RDA takes. For many cities and specific redevelopment districts, such a step would amount to a freeze. San Jose would have to search far and wide for projects in areas not affected by a cap, whereas Oakland might benefit from having large swaths of former industrial lands or brownfields which could work under the cap. It’s unlikely that this solution would net the $1.7 Billion in revenue Brown is seeking, but at least it would keep the lawyers at bay. I could also see a situation where there are caps on individual projects based on proportionality. Even if San Jose wanted to raise bonds for a big project right now it would be in trouble because Fitch just dropped its rating on non-housing RDA bonds from A to BBB-, putting the confidence in SJRA bonds just barely above that of junk bonds.
If you’re reading this and thinking, “GAWD why is ML writing about this crap again?!?!” or “Cities have too much power to let RDAs die” I suggest you read up on this. I assure you, when it comes to the A’s staying in the Bay Area long term, it’s very serious. The cities aren’t acting like they’ve got nothing to lose, they’re battening down the hatches. The end is nigh for the era of modern redevelopment throughout California, and if cities aren’t proactive, the chances of being able to pull off the next big library/sports facility/city hall/transit hub will dwindle to nothing (admittedly some are cheering this on).
Tomorrow, I’ll go over the weird possibilities for the local sports teams if RDAs were to crumble.