Council Votes to Transfer Redevelopment Assets to City

San Leandro City Council members voted unanimously on Monday night to adopt three measures intended to keep redevelopment assets out of state hands. The measures will transfer the agency's funds and properties to the city, ostensibly for safe keeping, and pay off a $2.1 million loan owed to the city's General Fund.

"This is to make sure the funds are kept in the hands of the people of San Leandro," said at the meeting.  

Cities across California are rushing to lock up redevelopment funds and property in the face of proposed state legislation that would essentially eliminate redevelopment agencies. The legislature is expected to discuss the proposal this week. 

The draft legislation, presented by the state's Department of Finance on Feb. 23, would implement Gov. Jerry Brown's plan to erase redevelopment agencies and redirect the funds currently assigned to them to pay for schools and other local services.

Under the proposal, redevelopment agencies would be replaced by successor agencies, likely cities and counties, which would be charged with selling off all redevelopment property and other assets. An oversight board would be appointed by city, county and school entities to supervise the process. 

In addition, redevelopment agencies would be required to remit to the county any funds in excess of the amount needed to pay off debts and fulfill contractual obligations. The funds would then be redistributed to school districts, cities and other local agencies.

The San Leandro redevelopment agency's plans to pay off the $2.1 million loan to the city's General Fund and to commit $1.3 million in funds currently in the agency's coffers to paving and improving Eden Road are an attempt to spend its money before it is potentially reclaimed. 

At Monday night's meeting, Council Member Joyce Starosciak expressed concern that, once in the General Fund, redevelopment money could be used for other purposes.

"My concern is that these assets move into the General Fund and all of a sudden we’re cash rich, and yet the redevelopment agency is at risk," she said. "All those promises we made to the community ... it’s just a riskier place to put the money."

Council Member Diana Souza also expressed some concern about the plan, questioning where the money, totaling $2.1 million, would show up in the city's budget. 

"So it has no restrictions tied to it?" Souza asked. 

"That’s the concept of a general fund," Mayor Cassidy quipped. 

Before taking a vote, council members agreed to add language to designate a special redevelopment holding fund within the General Fund to safeguard the money until the fate of the state's redevelopment agencies is decided by the legislature (and potentially the courts, since Gov. Brown's plan is likely to be challenged). 

In terms of transferring redevelopment properties to the city—21 parcels in total—the agreement includes a clause that obligates the city to use and develop the properties in accordance with redevelopment plans. If the redevelopment agency is eliminated, the city can choose to either sell or lease the properties, Community Development Director Luke Sims explained at the meeting. 

Sims said at the meeting that all the actions taken by the city to protect redevelopment funds could be reversed in the event that Gov. Brown's proposal doesn't get implemented.

"Hopefully these actions will be unnecessary," Sims said, "but because of the timing and pressure at the state level, we feel it is prudent to move forward with these actions."